We have frequently blogged here about the degree of attention that regulators pay to Chief Compliance Officers, and whether it is proper that they sometimes are named individually in Enforcement actions. And we are hardly the only ones who see this issue. The New York City Bar back in February – I know, that seems
Supervision
How NOT To Supervise For Churning
By Alan Wolper on
As should be clear to readers of this Blog, I find that Enforcement actions often provide the best guidance in terms of what regulators deem to be unacceptable conduct, which is very useful when dealing with subjective standards like “reasonableness.” This past week, FINRA published an AWC submitted by Coastal Equities, Inc. that offers a…
The Trouble With Texts
By Alan Wolper on
Having completed my Enforcement hearing conducted by Zoom – more about that in an upcoming post – I can finally turn my attention back to some matters that arose while I was busy.
One that stood out for the sheer (and frightening) universality of its lesson is an SEC settlement entered into by Jonestrading Institutional…
Two — No, Make That Three — FINRA AML Settlements Drive Home The Point: When It Comes To Supervision, Actions Speak Louder Than Words
By Alan Wolper on
Right after I posted this, FINRA announced a third AML settlement, this time with Interactive Brokers. It was no small deal: it came with a $15 million fine and an obligation to retain an independent consultant. (In addition to the FINRA AWC, Interactive simultaneously entered into settlements with the SEC — with another $11.5…
The Trouble With The “Should-Have-Known” Standard, As It Applies To Red Flags
By Alan Wolper on
Last year, I wrote a piece called “Wedbush Learns That It’s Not Enough Just To Spot Red Flags.” As the title suggests, it analyzed an SEC decision in which Wedbush was sanctioned because it failed in several respects to follow up on certain red flags it saw that were indicative of potential misconduct.
I am…
When It Comes To Suitability Violations, There Is No Flattening Of The Curve
By Alan Wolper on
Posted in Disciplinary Process, Enforcement, FINRA, Rule 2111, Senior Investors, Suitability, Supervision
Let’s take a step back from Covid-19 news, for a moment, which, rightfully, has dominated the news and everyone’s collective conscience, and focus on something that has been pervasive in the broker-dealer world for much, much longer than this virus, and which has taken its own toll on the industry in terms of dollars –…
When It Comes To Sanctions, What Does “Relevant Disciplinary History” Mean To FINRA, And Does It Vary Depending On The Size Of The Firm?
By Alan Wolper on
The day after Christmas, FINRA issued a press release announcing that five big firms – Citigroup, J.P. Morgan Chase, LPL, Morgan Stanley and Merrill Lynch – had each entered into a settlement, collectively agreeing to pay a $1.4 million fine. Their offense? They each violated FINRA’s supervisory rules because for a number of years, dating…
Wedbush Learns That It’s Not Enough Just To Spot Red Flags
By Alan Wolper on
Posted in SEC, Supervision
I have been busy the last month getting ready for a big arbitration, and attending the first week of what looks like is going to be a four- or five-week slog when all is said and done. So, I am just catching up on some recent developments, and mulling over what might be of interest…
Ameriprise Learns The Hard Lesson That To Be Deemed “Reasonable,” A Supervisory System Actually Has To Work
By Alan Wolper on
Posted in SEC, Supervision
A little over a year ago, I blogged about a FINRA Enforcement action against an Ameriprise rep – but, notably, not Ameriprise – to highlight what a great job the firm did in ensuring that its sales force was not engaging in any undisclosed outside business activities. It had a robust supervisory procedure, with multiple…
FINRA’s Exam Guidance Is A Big Yawn
By Alan Wolper on
As promised, FINRA has released its first Report outlining common findings from its examinations, in an effort to help member firms comply with the rules and, presumably, avoid problems that other firms encountered. A noble idea, especially for an entity not exactly known (at least lately) for its proactive measures to assist BDs with their…