As everyone is likely well aware, one of the principal changes that happened when FINRA retired the old suitability rule – NASD Rule 2310 – and replaced it with shiny new FINRA Rule 2111 back in 2012 was the broadening of the scope of the rule to encompass not just recommendations to buy or sell
Enforcement
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…
FINRA Zoom Hearing Goes BOOM!
By Alan Wolper on
Attentive readers will recall that a couple of weeks ago, I mentioned in a preface to great post from Chris about expungement becoming an endangered creature due to changes in FINRA rule that I was about to embark on a two-week FINRA Enforcement hearing, all done by Zoom, by consent. I promised to provide some…
FINRA AWC Provides New Defense To Allegation Of “Willfulness”
By Alan Wolper on
I dare you. In fact, I double-dog dare you to figure out how or why FINRA decides to charge willfulness in some cases but not in others. Bottom line is that it is nearly impossible (except if you’re a big firm, in which case you can rest easy that FINRA will manage to skip the…
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…
FINRA ♥ Rule 8210
By Alan Wolper on
I hope that you have had the chance to enjoy Jessica Hopper’s paean to Rule 8210 in her recent blog posted on FINRA’s website. Very disturbing, and for all the old reasons.
First, once again, she starts by patting herself – well, not just herself, I guess, but Enforcement generally – on the back for…
For FINRA, Restitution Is The Solution
By Alan Wolper on
Seems like just days ago I blogged about Jessica Hopper and her commitment to providing restitution to customers. Since I posted that blog, there were two other settlements (which I added to that blog as updates) in which FINRA again seemed to prioritize restitution over the imposition of a fine. Yesterday, however, FINRA announced a…
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…
SunTrust Settlement Proves That Jessica Hopper, FINRA’s Head Of Enforcement, Would Be A Good Umpire
By Alan Wolper on
I may have said this before in another post, but in my opinion, whether a baseball umpire is good or bad is not a matter of whether he has a low strikezone, a high strikezone, or a wide one. What matters is that whatever that umpire deems to be a strike vs. a ball is…