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… Continue Reading
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FINRA’s Exam Guidance Is A Big Yawn
Posted in Compliance, Enforcement, FINRA, SupervisionAs 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… Continue Reading
The Head-In-The-Sand Approach To Supervision: A Primer
Posted in CCO, Defenses, Disciplinary Process, Enforcement, FINRA, SupervisionThere’s a claimant’s lawyer I’ve litigated against several times who is very good at his job, and who I personally like very much. Part of the reason for his success is that he is very engaging, so even when he utterly lacks any decent facts on which to base his claim – which is often… Continue Reading
FINRA’s AML Fines: Murky (And Expensive) Waters
Posted in AML, Disciplinary Process, Enforcement, FINRA, Rule 3011, Rule 3310, Sanctions, SupervisionIn this post, Michael Gross complains — and rightly so — about the lack of any definitive guidance from FINRA regarding the appropriate range of fines to be imposed for AML violations. The bigger issue, however, at least in my view, is not necessarily the lack of guidance, but the fact that the fines FINRA… Continue Reading
As Berthel Fisher Just Learned, Those Who Don’t Know FINRA’s History Of Disciplinary Actions Are Doomed To Repeat It
Posted in Disciplinary Process, Enforcement, FINRA, SupervisionI have often used these posts to lament the fact that FINRA consistently acts as an enforcement driven group of crazed examiners, hell-bent on writing firms up for technical violations, at best, uncaring about the dramatic ramifications of their seemingly ceaseless attack on well-meaning broker-dealers and their owners. While I still harbor those feelings, occasionally… Continue Reading
FINRA Tweaks The Sanction Guidelines Again And – Guess What? – It Wasn’t To Make Them Gentler
Posted in Defenses, Disciplinary Process, Enforcement, FINRA, Sanctions, SupervisionRemember a few weeks ago? Remember I blogged about Robert Cook, FINRA’s new CEO? And how he was saying all the right things about FINRA perhaps being juuuuust a bit too Enforcement oriented? I expressed hope – sincere but wary hope – that given his remarks, it was possible that the pendulum might actually start… Continue Reading
Supervision Requires More Than Trust; It Means Trust With Verification
Posted in annuities, Compliance, SupervisionBack in December, the State of Massachusetts filed a Complaint against LPL and one of its big producers alleging that the producer, Roger Zullo, defrauded his clients and lied to his supervisors in connection with the sale of variable annuities. What struck me when I read the Complaint, and what has still stuck with me,… Continue Reading
In AML World, The Need To File A SAR Can, Apparently, Be Too Obvious To Ignore
Posted in AML, Compliance, Disciplinary Process, Enforcement, FINRA, SEC, SupervisionIf you’re reading this, then you undoubtedly already know that FINRA and SEC are, simply, AML crazy. Rightly or wrongly, they are both focusing more than ever on broker-dealers’ fulfillment of their supervisory obligation to be sensitive to the laundry list of red flags first articulated in a Notice to Members back in 2002 that… Continue Reading
According To FINRA, “Culture Of Compliance” Is Not Only Definable, It’s Enforceable
Posted in Compliance, Culture, Disciplinary Process, Enforcement, FINRA, SupervisionEarlier this year, as part of its 2016 Examination Priorities, FINRA spent a lot time discussing the “culture of compliance” at broker-dealers, the notion that firms need to create an atmosphere where compliance with rules and regulations is more than just lip service, but, rather, where it is a priority established by firm management –… Continue Reading
Good Grief! MetLife Agrees To $20 Million Fine, And Another $5 Million In Restitution! For Negligence!
Posted in annuities, Disciplinary Process, Enforcement, FINRA, Suitability, SupervisionFINRA announced today that it entered into a settlement with MetLife Securities, Inc. in which MetLife agreed to pay FINRA a $20 million fine and its customers up to $5 million in compensation for, basically, making misrepresentations over a five-year period to customers who replaced one variable annuity with another regarding the costs of making… Continue Reading
Highlights from Day One of SIFMA-CL Conference
Posted in Best execution, CCO liability, Culture, Fiduciary duty, Fiduciary Standard, FINRA, municipal securities, SEC, SIFMA, SupervisionOpening Session/Firm Culture/CCO Liability. If you are reading this blog, then you, like me, have been probably eagerly waiting for the start of SIFMA’s annual Compliance and Legal conference not just for the jumbo shrimp at the reception, but also to learn some insights from the regulators about their concerns and intentions. If you attended… Continue Reading
FINRA’s 2016 Examination Priorities Letter: Focus On “Firm Culture”
Posted in Compliance, Expungement, FINRA, Senior Investors, Suitability, SupervisionYesterday, FINRA released its annual Examination Priorities Letter in which it set forth the top issues that would guide its examinations in the coming year. Running 13 pages in length (while complaining about having to be so “brief”), FINRA set forth some of the “many areas of potential concern” it expects to encounter this year.… Continue Reading
SEC Offers Guidance On Compliance: Don’t Forget The Basics
Posted in Compliance, Conflict of Interest, Examination, FINRA, SupervisionI posted several blogs this summer about our victory over the SEC in the Robare case (which, naturally, has been appealed by the SEC’s unhappy Division of Enforcement). One of the key elements in our ability to prevail in that matter was my client’s extensive use of outside securities consultants to assist in the preparation and… Continue Reading
The Ongoing Puzzle Of Ongoing Due Diligence
Posted in Disciplinary Process, Due diligence, Enforcement, Examination, Fiduciary Standard, FINRA, Private Placement, Reg D, Rule 2111, SupervisionI am currently in the midst of a FINRA examination that is largely focused on the adequacy of the due diligence that my broker-dealer client conducted of a private placement. What is puzzling about the exam is that FINRA is not just interested in the due diligence that was conducted prior to effecting any sales… Continue Reading
Compliance Officer Liability: Findings Without Sanctions? The Plot Thickens
Posted in Administrative Proceedings, appeal, Compliance, Enforcement, RIA, Sanctions, SEC, SupervisionWe have previously posted on the issue of CCO liability, a very sensitive subject, to say the least, for many readers of this blog. If this is a subject that interests you, then there was a very intriguing development this past week in this area that merits your attention. It came in the form of… Continue Reading
Actions Speak Louder Than Words: The Regulation of Chief Compliance Officer (CCO) Conduct
Posted in Compliance, Disciplinary Process, Enforcement, SEC, SupervisionYesterday, the SEC held its 2015 “National Compliance Outreach Program for Broker-Dealers.” The program was designed to “provide[] an open forum for regulators and industry professionals to share strong compliance practices and promote the exchange of ideas to develop an effective compliance structure.” In the spirit of this cooperation, SEC Chairwoman White opened the conference… Continue Reading
For Those About to be Suspended: The Guessing Game is Over Whether You Can Receive Your Trails
Posted in Disciplinary Process, Enforcement, FINRA, Rule 2040, Rule 8311, Sanctions, Supervision, suspension, Trail commissionsThere are lots of FINRA rules, so many that some don’t get the attention they deserve because others, like the suitability rule or the supervision rule, generally hog the limelight. Moreover, some rules have such narrow application that you may not realize they even exist because they impact only a very few people or entities.… Continue Reading
Day Two of FINRA’s Annual Conference
Posted in Enforcement, Examination, FINRA, Registered Representative, Rule 2111, Senior Investors, Suitability, SupervisionI wish I was able to report some fireworks, or something semi-controversial, but FINRA and its hand-picked panelists managed to avoid saying anything particularly remarkable in any way. If you have never attended one of these conferences, and think that people come to learn cutting edge strategies, forget it. It is all very basic, very… Continue Reading
FINRA’s New Sanction Guidelines: The More Things Change, The More They Stay The Same
Posted in Disciplinary Process, Enforcement, FINRA, Sanctions, Settlements, SupervisionJust a week ago, I ran a post about FINRA’s Sanction Guidelines, suggesting that they appear to have no relevance anymore, given the vast disparity between fines that FINRA is actually imposing in settled cases, on the one hand, and the supposed maximum fines described in the Sanction Guidelines, on the other. In an excellent… Continue Reading
Do The FINRA Sanction Guidelines Continue To Have Any Relevance?
Posted in Disciplinary Process, Enforcement, Sanctions, Settlements, SupervisionI read with interest the press release FINRA issued this week announcing an $11.7 million settlement with LPL, principally over what FINRA characterized as “widespread supervisory failures.” There were two things most noteworthy to me.[1] The first, interestingly, is not the size of the monetary sanctions (a $10 million fine plus $1.7 million in restitution),… Continue Reading
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