Broker- Dealer Law Corner

Broker- Dealer Law Corner

Tag Archives: broker-dealers

Ameriprise Learns The Hard Lesson That To Be Deemed “Reasonable,” A Supervisory System Actually Has To Work

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… Continue Reading

FINRA Stats Reveal Horribly Kept Secret: Small Firms Are The Heart And Soul Of The Brokerage Industry, But Dying Off, Nevertheless

Posted in FINRA
If you are like me, and spend your idle time twiddling around the FINRA website, then you already know that FINRA publishes a variety of mathematical statistics, updated periodically, that provide, along with the sobering tally of the Enforcement actions brought and fines imposed, a good insight into the composition of the membership.  Yesterday, FINRA… Continue Reading

FINRA Proposes To Require Disclosure Of Insurance Information In Arbitrations. Seriously.

Posted in Arbitration, FINRA
Once upon a time, FINRA at least pretended that it was interested in maintaining a level playing field for claimants and respondents in the arbitrations it administers. Today, all that pretense has been jettisoned.  In Regulatory Notice 18-22, which seeks comments on FINRA’s proposal to require respondents to produce information relating to their insurance policies,… Continue Reading

BD Learns It’s Not Enough To Have A Supervisory Procedure For OBAs, You Actually Have To Follow It

Posted in Enforcement, FINRA, Outside business activities, Rule 3270, Uncategorized
In most Enforcement cases involving outside business activities, it is the registered rep who is named as the respondent, and the allegation is that the RR failed to provide notice (or timely notice) to his or her broker-dealer about the OBA. On occasion, however, it is the BD that gets tripped up, typically for not… Continue Reading

FINRA’s “Massive” Discovery Failure Results In…Absolutely Nothing

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions, Uncategorized
You are not going to believe this one. Here are the unadulterated facts, taken directly from the Order entered by the FINRA Hearing Officer (an Order, by the way, which FINRA elected not to publish on its website): Five days into an Enforcement hearing against Respondent Steven Larson, “Enforcement disclosed that it just realized it… Continue Reading

Has The SEC Taken All The Mystery Out Of Filing SARs?

Posted in AML, SAR, SEC
This week, Charles Schwab consented to pay the SEC a $2.8 million civil penalty for failing to file SARs on certain transactions – suspicious transactions, namely – by a number of independent investment advisors that Schwab had terminated from its platform. This matter is noteworthy not just for the size of the civil penalty, but because… Continue Reading

PIABA Lawyers Convince Congress Of The Importance Of Them Collecting Their Attorneys’ Fees

Posted in Arbitration, FINRA, PIABA
I have written before of the ferocious effort by PIABA lawyers to fight for their ability to collect attorneys’ fees on contingency matters – FINRA arbitrations – that they manage to win but which never get satisfied because the respondent broker-dealer has the temerity to go out of business rather than paying the award. PIABA… Continue Reading

The Demise Of FINRA’s District Committees…And Self Regulation, Too?

Posted in District Committees, FINRA
Many people, myself included, are of the view that FINRA today remains a self-regulatory organization in name only. For years now, FINRA has taken a series of actions decried by its member firms – new rules, new interpretations of old rules, zealous enforcement of rules, the imposition of punitive sanctions – who correctly complain that… Continue Reading

FINRA Knows Best – At Least According To FINRA – When It Comes To Hiring Decisions

Posted in FINRA, Hiring practices, Rule 1017
I don’t know how many times I’ve written about FINRA’s efforts over the years to address “rogue brokers,” or what it refers to nowadays more politically correctly as “high-risk brokers.” It doesn’t really matter what blog post you read, or when I wrote it, as they all tell essentially the same story:  FINRA is just… Continue Reading

Reverse-Churning: BDs Are Damned If They Do, And Damned If They Don’t

Posted in Compliance, Fiduciary Rule, FINRA, Reverse churning
A 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

FINRA’s Stated Paradigm Shift On Enforcement Actions

Posted in Disciplinary Process, Enforcement, FINRA
I 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

Do FINRA’s Proposed MAP Rules Put PIABA’s Concern Over Money Ahead Of Fairness To Members?

Posted in Arbitration, FINRA, MAP, PIABA
I 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

Expungement: Already An “Extraordinary Measure,” FINRA Now Seeks To Make It Even Less Accessible

Posted in Arbitration, Expungement, FINRA
Expungement 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

Can FINRA Deliver On A Promise To Provide Meaningful Relief To Compliance Departments?

Posted in Compliance, FINRA, Outside business activities, Rule 3270
As 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

No Bar For Submitting False Expense Reports?

Posted in Disciplinary Process, Enforcement, FINRA, Sanctions
Here 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

What Is FINRA’s Job?

Posted in Compliance, FINRA
A 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
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