It is a simple fact that a broker-dealer has no obligation to supervise a disclosed outside business activity. How do I know? FINRA has said so. This, for instance, comes straight from Reg Notice 05-50: “Rule 3030 does not require that the firm supervise or even approve an outside business activity, although a
FINRA
Trouble With Your Clearing Firm? FINRA To The Rescue
By UB Greensfelder on
For the most part, my broker-dealer clients are introducing firms that clear through any number of generally recognized clearing firms. Increasingly, for whatever reason, I have been asked to get involved in disputes with clearing firms surrounding terms contained in the clearing agreement. Unfortunately, this typically turns into a big problem, as these agreements are…
Procedural Motions In FINRA Enforcement Actions: An Exercise In Futility
By UB Greensfelder on
Defending a FINRA Enforcement action is not easy. This stems principally from the fact that FINRA simply won’t file a complaint in the first place if they believe that there’s any realistic chance they will not win the case. Thus, they expect to win every time they do file a complaint, and perhaps not unreasonably…
FINRA’s 2015 Annual Report: No Cliffhangers Here
By UB Greensfelder on
Posted in Annual Report, FINRA
Yesterday, FINRA released its 2015 Annual Report, and it contained maybe one surprising figure: a decrease in the amount of fines it levied. Beyond that, however, it was more of the same that we have seen over the last few years; just read my blog from a year ago about the 2014 report and…
The Wendell Belden Case And Its Progeny: Fiduciary Before Fiduciary Was Cool
By UB Greensfelder on
The entire securities world is anxiously awaiting the implementation of the fiduciary standard over retirement accounts, and, by most accounts, the eventual spread of that standard to ordinary investment accounts. I am not prepared to argue that this is not a big deal, and will cost the industry a ton of time and money to…
In AML World, The Need To File A SAR Can, Apparently, Be Too Obvious To Ignore
By UB Greensfelder on
If 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…
Whatever Happened To The “Self” In Self-Regulation?
By UB Greensfelder on
Posted in Board of Governors, FINRA
Buried among the usual hodgepodge of stuff in a recent weekly FINRA blast email was a notice that the SEC was accepting comments on FINRA’s request to change the composition of the NAC, the National Adjudicatory Council, so that it mirrors the FINRA Board of Governors, and instead of having an equal number of industry…
The Long Arm Of The Law Has Nothing On FINRA’s Reach
By UB Greensfelder on
So, you’re a registered rep, working for a broker-dealer. Necessarily, you are registered with and subject to the oversight of FINRA, not a particularly happy proposition. But at least you can take comfort in the fact that while FINRA may have the right to stick its nose into your securities business, what you do away…
Altering Documents In A FINRA Arbitration Can Have Consequences That Go Well Beyond The Arbitration Itself…At Least For Respondents
By UB Greensfelder on
The FINRA investigative process and the arbitration process exist side-by-side; at times, the misconduct that is alleged by a claimant in a Statement of Claim may simultaneously be the subject of an examination by Member Regulation, or even an Enforcement Complaint. Ordinarily, Enforcement doesn’t pay much attention to what happens in a parallel arbitration, except…
According To FINRA, “Culture Of Compliance” Is Not Only Definable, It’s Enforceable
By UB Greensfelder on
Earlier 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 –…