Look, I get that nobody’s perfect. We all make mistakes, it’s just human nature. I told my kids when they were growing up the same thing I tell my associates: it’s ok to make mistakes, it’s just not ok to repeat them. Sadly, my broker-dealer clients live in a heavily regulated environment, so when they
FINRA’s New Sanction Guidelines: The More Things Change, The More They Stay The Same
Just a week ago, I ran a post about FINRA’s Sanction Guidelines, suggesting that they appear to have no relevance anymore, given the vast disparity between fines that FINRA is actually imposing in settled cases, on the one hand, and the supposed maximum fines described in the Sanction Guidelines, on the other. In an excellent
Why are Senior Investors so Special? (Part 1)
Over the last few months and years, securities regulators have repeatedly emphasized the special care and attention senior investors[1] should be afforded by broker-dealers and their associated persons. As part of that focus, on April 15, 2015, FINRA and the SEC Staff published their National Senior Investor Initiative Report. The report highlighted recent
Sometimes You Lose: Why Mandated Insurance Coverage for Broker-Dealers Is Absurd
I recently had the extremely unhappy experience of losing a FINRA arbitration following a week-long hearing. Fortunately, this tends to be a rare occurrence around here, but that’s not really a surprise, since we tend to go to hearing only in those cases with strong facts, while we work hard to settle those with difficult
May I Go Out of Business, Please?
It may be the ultimate example of the heavy price that a BD pays for being subject to FINRA regulation, and it happens all the time. Broker-dealer A decides to cease operations, for whatever reason, so it files a Form BDW (which, technically speaking, is a request by the BD to withdraw its FINRA membership
Settling with FINRA Can Be Ugly, But It Sure Beats the Alternative
I used to work for NASD (before it became FINRA). First as an attorney for the Department of Enforcement, and, later, as the Director of the Atlanta District office. Given the scope of my experience, I was able to see Enforcement cases as they were developed in the examination phase, conducted by Member Regulation, through
Narrative Answers in Enforcement Proceedings: Practical, Yet Impossible
At a recent industry conference in New York, members of FINRA’s Office of Hearing Officers gathered to discuss current issues and topics relevant to FINRA disciplinary hearings. During one of the sessions, a Hearing Officer panelist lamented the format of the Answers he typically receives from the respondents in his cases. Almost without exception, respondents
Mid-Case Disciplinary Referrals: Unnecessary and Unfair
FINRA recently passed an amendment to the Code of Arbitration Procedure which provides that arbitrators no longer have to wait until the end of a case to make a disciplinary referral. Now, panelists are free to make such a referral in the middle of a hearing!
My first observation is: was there really a need
The Mystery Why FINRA “Close-Out” Letters Are Inadmissible in Arbitrations
Anyone who’s handled FINRA arbitrations is well familiar with panelists who regularly respond to evidentiary objections by overruling them, but with the admonition that they will only give whatever weight, if any, to the evidence that they deem appropriate. While that can sometimes be frustrating, it is understandable. The Federal Arbitration Act, and the many
SEC Supports Creating a Uniform Fiduciary Standard; But is FINRA Already Enforcing It?
SEC Chairwoman Mary Jo White recently announced her support of a uniform fiduciary standard for broker-dealers and investment advisers, ending any remaining speculation as to her views on the subject. The announcement kicked of a whirlwind of speculation in the industry – What would the new standard look like? When would we see it? Will