By Alan Wolper on Posted in Enforcement,Examination,FINRAOn Friday last week, FINRA released a report discussing the findings from its 2018 exams, providing what it described as “selected observations” that were deemed to have “potential significance.” Even with that tepid introduction, in theory, this is still a great idea, since anyone in the industry, even so-called “good” or “clean” firms, should welcome… Continue Reading
By Alan Wolper on Posted in Disciplinary Process,Enforcement,FINRA,SanctionsLast year I wrote about FINRA’s effort to encourage firms to self-report their problems, pausing to wonder at the suggestion attributed to Jessica Hopper, a Senior Vice President with Enforcement, that cooperating with FINRA by self-reporting “not only fulfills a firm’s regulatory responsibilities, but it can also mean the difference between a slap on the… Continue Reading
By Alan Wolper on Posted in Enforcement,FINRA,Outside business activities,Rule 3270,UncategorizedIn 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
By Alan Wolper on Posted in Disciplinary Process,Enforcement,FINRA,Sanctions,UncategorizedYou 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
By Michael Gross on Posted in Churning,Enforcement,FINRAWhen Michael called me to tell me about the subject of this post, I frankly thought he was making it up. The notion that FINRA was seriously suggesting deleting one of the historically recognized essential elements of a churning claim — principally because otherwise it was too difficult for FINRA to prove churning — seemed… 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 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 Enforcement,FINRA,Rule 8210Once again, Rule 8210 has me frustrated. And angry. Well, not the rule itself, but the aggressive manner in which FINRA continues to wield it, and how its scope is interpreted by hearing panels called upon to consider cases involving what seem to me, at least, to be troublesome uses of Rule 8210. Let’s start… 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 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 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 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 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 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,Rule 9141,SECThere has been a lot of talk, especially given the relatively recent change in the Executive Branch in Washington, about the problem with the “revolving door,” a concept so wide in scope that it actually has its own Wikipedia page. It is defined to be the “movement of personnel between roles as legislators and regulators… 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
By Alan Wolper on Posted in Disciplinary Process,Disclosure,Enforcement,FINRA,Outside business activitiesOutside business activities are in the news. In Reg Notice 17-20, FINRA announced that it was seeking comments in an effort to learn whether or not the existing rules governing OBAs are effective. (The comment period is open until late June, so if you have strong feelings on the subject, now is the time to… Continue Reading
By Alan Wolper on Posted in AML,Compliance,EnforcementMany of my clients chafe at the AML rule, given the cost of compliance and the even higher cost of defending an Enforcement action if the regulators conclude that red flags were somehow missed, or spotted but not dealt with adequately, or soon enough, or both, or spotting the red flags, responding to them, but… Continue Reading
By Alan Wolper on Posted in Disciplinary Process,Enforcement,FINRA,Reg Notice 08-70,Sanctions,SettlementsI read a fascinating piece the other day in BankInvestmentConsultant about FINRA’s Enforcement program, specifically about the notion of broker-dealers self-reporting problems, and whether that was a smart thing to do. Some of the quotes attributed to FINRA senior Enforcement management are really interesting, so I wanted to share them with you in the event… Continue Reading
