By Alan Wolper on Posted in Compliance,Fiduciary Rule,FINRA,Reverse churningA couple of years ago, I blogged about the concept of “reverse churning,” i.e., putting a customer who trades only infrequently into a fee-based account, thus costing the customer a lot more than it would have cost that customer to be in a commission-based account. The reason this became a topic was, at the time,… Continue Reading
By Michael Gross on Posted in Disciplinary Process,Enforcement,FINRAI have spoken about FINRA possibly putting an end to the policy of pursuing cases where formal disciplinary action serves little to no regulatory purpose. That welcome paradigm shift may be upon us. This year, FINRA, in essence, pronounced that its “broken windows” strategy of pursuing Enforcement cases over the smallest and most technical violations… Continue Reading
By Alan Wolper on Posted in Arbitration,FINRA,MAP,PIABAI have often used this forum to complain about FINRA’s lack of backbone when it comes to dealing with PIABA, the group of lawyers who represent customers of broker-dealers, principally in arbitrations. Over the years, FINRA has amended its rules time and again in response to loud claims by PIABA that the arbitration process is… Continue Reading
By Blaine Doyle on Posted in Disciplinary Process,Enforcement,FINRA,OTRI apologize for not posting anything recently, but, sadly, I was embroiled in a two-week arbitration that occupied most of my recent attention. I am home, however, and back in the saddle. In the meantime, here’s a post from Blaine Doyle, author of the classiest post ever in this blog, something about ancient Greece. I… Continue Reading
By Alan Wolper on Posted in Arbitration,Expungement,FINRAExpungement is a funny thing, and here’s why: for years, claimants’ counsel have complained loudly to FINRA that expungement was being granted too frequently, that legitimate customer complaints were disappearing from CRD, resulting in an unfair, sanitized representation of brokers’ records that put unsuspecting customers at risk. As Andrew Stoltmann, PIABA’s president, put it so… Continue Reading
By Alan Wolper on Posted in Compliance,FINRA,Outside business activities,Rule 3270As I have discussed before, there are some rule violations that are going to happen no matter what FINRA says about them, no matter how many Enforcement cases it brings, and no matter what BDs do to “detect and prevent” such violations. A prime example of such is outside business activities, or OBAs. The rule… Continue Reading
By Alan Wolper on 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
By Alan Wolper on Posted in FINRA,PIABAA week or so ago, I highlighted in a post the acceptance speech of PIABA’s incoming president, Andrew Stoltmann, in which he announced his intent to wage “war” on the securities industry. Bluster aside, Andrew has been true to his word. His opening volley is an attack on the public governors who sit on FINRA’s… Continue Reading
By Michael Gross on Posted in Disciplinary Process,Enforcement,FINRA,SanctionsHere is a post from Michael about a recent settlement involving the submission of false expense reports. The issue isn’t the misconduct, but, rather, the rather tepid sanctions imposed. Do I sense the pendulum starting to swing back? – Alan It is no secret that FINRA’s Department of Enforcement is attempting to maintain a lower… Continue Reading
By Alan Wolper on Posted in Arbitration,FINRA,PIABAI have stated more than once in these posts that among claimants’ counsel, I have perhaps the greatest respect for Andrew Stoltmann, a fellow Chicagoan. I am not saying that I ever agree with anything he has to say, because I don’t, but he is a gentleman, he acts ethically, he is fun to listen… Continue Reading
By Alan Wolper on Posted in Disciplinary Process,Enforcement,FINRA,Sanctions,SECBear with me here as I relate the tale of John Saad and his tortuous path through the FINRA Enforcement process and, ultimately, the court system. It is worth following me on this journey, as the upshot of the story is that FINRA, which is so quick to want to bar every respondent it sees,… Continue Reading
By Alan Wolper on Posted in Defenses,Disciplinary Process,Enforcement,FINRA,Rule 2010I am on the record, many times, with my belief that, at least in theory, FINRA should never lose any Enforcement cases it files. This is for the simple reason that if FINRA has any genuine doubts about its ability to prevail in front of a hearing panel, due to the quality of the evidence… Continue Reading
By Alan Wolper on Posted in Confidential customer information,Cybersecurity,FINRAAll of you who use Equifax to conduct a part of your CIP responsibilities, raise your hands. Ok, now, only to those of you whose hands are in the air: how many of you have checked your firm’s incident response plan to determine the steps that need to be taken in the event of a… Continue Reading
By Alan Wolper on Posted in Compliance,FINRAA client of mine bought a BD, thereby requiring him to go through the CMA process. It was a very small firm, with fewer than ten registered reps. He was a newly minted 24, so he had other, more experienced principals on board to handle all supervisory responsibilities. His job, as outlined in the firm’s… Continue Reading
By Alan Wolper on Posted in Defenses,Disciplinary Process,Enforcement,SEC,SettlementsA little over a year ago, the SEC announced a stunning settlement with Merrill Lynch regarding its violation of SEC Rule 15c3-3, commonly known as the “Customer Protection Rule.” This is an important rule whose name gives away its purpose: it is designed to ensure that if a broker-dealer ever fails, customer assets can be… Continue Reading
By Michael Gross on Posted in Arbitration,Disciplinary Process,FINRAHere is a very interesting post from Michael Gross about what happens at the end of a FINRA exam. One point that he omitted, but worth mentioning, is that in the event FINRA does issue a close-out letter stating that its exam is done and no disciplinary action will be taken, that letter cannot be… Continue Reading
By Greg Stein on Posted in Cybersecurity,FINRA,SECI am happy to share this post from my colleague, Greg Stein, about ransomware. While ransomware is not something unique to the financial services industry, because, as criminal Willie Sutton famously answered when asked why he robbed banks, our industry is “where the money is,” BDs, IAs and banks do seem to attract more than their fair… Continue Reading
By Alan Wolper on 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
By Alan Wolper on Posted in Arbitration,Board of Governors,Enforcement,FINRASo, as you undoubtedly recall, in its typical reactive approach to regulation, FINRA has expressed concern – after having concerns expressed to it by others (none of whom are actually from the securities industry, of course) – about (1) the high number of registered reps working in the industry with spotty disciplinary records, and (2)… Continue Reading
By Alan Wolper on Posted in Disciplinary Process,FINRA,ODABack in the old days, back when it was still NASD and it bore some reasonable semblance of a true self-regulatory organization, the important decisions relating to the Enforcement process – the decision to issue a complaint, the decision to settle a case, and the decision in litigated matters that actually went to hearing –… Continue Reading
By Alan Wolper on Posted in Annual Report,FINRAThis past week, FINRA very, very quietly released its Annual Report for 2016. Too quietly, as they say in the movies. No press release. No press conference. No media attention at all, hardly. As President Trump just asked about State Election Commissioners who refused to respond to a request from his Election Fraud taskforce for… Continue Reading
By Michael Gross on Posted in Disciplinary Process,Enforcement,FINRA,Rule 8210My dissatisfaction with FINRA’s Rule 8210 and, more specifically, the aggressive manner with which FINRA wields that rule, has been the subject of several prior blogs. I happy to report that my partner, Michael Gross, has drunk the Kool-Aid, and joined me in tilting at this windmill. – Alan The first paragraph of a paper calling… Continue Reading
By Alan Wolper on Posted in Discovery,Enforcement,FINRA,Rule 8210,Rule 9251,UncategorizedLet’s play pretend. Can you imagine what FINRA would do to a respondent broker-dealer in an Enforcement action that announced on Day Five of the hearing – i.e., during the “final phase” of the hearing – that – whoops! – it had forgotten to produce certain documents that it should have produced eight months before… Continue Reading
By Alan Wolper on Posted in FINRA,Registered Representative,Rogue repNot too long ago, I blogged a couple of times about the amount of attention that is suddenly being paid to the number of registered representatives with disciplinary histories working for FINRA member firms, i.e., the so-called recidivists (who used to be called “rogue reps”). Among the complaints I voiced was the fact that while… Continue Reading
