By Alan Wolper on Posted in Form ADV,RIA,SECMost of the time, the cases I write about were some other lawyer’s. In some respects, it’s easier to offer comments when it isn’t my case. I can, hopefully, be more objective, less pissed off (when the result is one I disagree with, of course), and content merely to mine the case for interesting lessons… Continue Reading
By Alan Wolper on Posted in Examination,Privacy,Reg S-P,SECI am hardly saying that SEC Regulation S-P is the sexiest of regulations. I mean, has any customer is history actually read one of those exciting statement stuffers that discloses in some dense font a BD’s privacy policy? Likely not, but, nevertheless, it remains that in this day and age, with hacking and phishing and… Continue Reading
By Alan Wolper on Posted in SEC,SupervisionI have been busy the last month getting ready for a big arbitration, and attending the first week of what looks like is going to be a four- or five-week slog when all is said and done. So, I am just catching up on some recent developments, and mulling over what might be of interest… Continue Reading
By Ken Berg on Posted in Administrative Proceedings,NCLA,SECMy partner, Ken Berg, writes about his recent meeting with the NCLA, a group that anyone who has an administrative practice should be familiar with. – Alan I had the privilege of being invited to attend in Washington, D.C., on February 28, 2019, the inaugural panel discussion hosted by a relatively new nonprofit civil rights… Continue Reading
By Blaine Doyle on Posted in CFTC,Compliance,Crypto,Cybersecurity,FINRA,SECI recently had to the opportunity to sit in on a talk from high ranking CFTC and SEC enforcement officials at a local bar association meeting. The purpose of the get together was, in part, to let industry folks and their lawyers know what the regulators will be focusing on in the near future in… Continue Reading
By Alan Wolper on Posted in SEC,SupervisionA 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
By Alan Wolper on Posted in AML,SAR,SECThis 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
By Ken Berg on Posted in Administrative Proceedings,appeal,Defenses,SECHere is an important post by my partner, Ken Berg, regarding SEC administrative proceedings, and what we can expect following the Supreme Court’s recent decision in Lucia. – Alan By now everyone knows the US Supreme Court declared the SEC’s administrative proceedings unconstitutional because the ALJs were improperly hired by the SEC staff instead of… Continue Reading
By Heidi VonderHeide on Posted in Administrative Proceedings,SECOn January 12, 2018, the U.S. Supreme Court agreed to review the constitutionality of the SEC’s appointment of its in-house administrative law judges (“ALJs” for short). As we’ve discussed previously on the blog, a trip to SCOTUS seemed inevitable after the 10th Circuit handed down its decision in Bandimere, concluding that the SEC ALJs were… Continue Reading
By Alan Wolper on Posted in Defenses,Disciplinary Process,Enforcement,SEC,SettlementsA little over a year ago, the SEC announced a stunning settlement with Merrill Lynch regarding its violation of SEC Rule 15c3-3, commonly known as the “Customer Protection Rule.” This is an important rule whose name gives away its purpose: it is designed to ensure that if a broker-dealer ever fails, customer assets can be… Continue Reading
By Alan Wolper on Posted in Administrative Proceedings,Defenses,Disciplinary Process,SECThis one belongs in the “truth is stranger than fiction” category. By now, you are probably familiar with the exploits of Dawn Bennett, former hostess of her radio show, “Financial Myth Busting.” She was the one who the SEC permanently barred last year after she elected not to appear at her administrative hearing (after her… Continue Reading
By on Posted in Cybersecurity,FINRA,SECI am happy to share this post from my colleague, Greg Stein, about ransomware. While ransomware is not something unique to the financial services industry, because, as criminal Willie Sutton famously answered when asked why he robbed banks, our industry is “where the money is,” BDs, IAs and banks do seem to attract more than their fair… 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 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,Examination,FINRA,SECAt the beginning of most FINRA OTRs, the examiner reads from a script of sorts, outlining some of the basic rules governing the proceeding. One of the things the script calls for is an express acknowledgement by the witness that he or she is testifying pursuant to Rule 8210, and that, as a result, a… Continue Reading
By Alan Wolper on Posted in custody rule,SECA common complaint that I hear from broker-dealers and investment advisors is that it is nearly impossible anymore to obtain informal guidance from their regulators. Where it was once possible, even normal, to make a call and get casual advice how to comply with a particularly tricky rule, nowadays, regulators routinely decline to respond to… Continue Reading
By Ken Berg on Posted in Administrative Proceedings,Defenses,Disciplinary Process,SECIn my second post on constitutionally-based affirmative defenses to SEC administrative proceedings, I discussed the shift of momentum in favor of the defense that the process of hiring SEC ALJs violates the Appointments Clause of the U.S. Constitution. This post examines the defense that the process of removing SEC ALJs violates the separation of power… Continue Reading
By Ken Berg on Posted in Administrative Proceedings,appeal,Dodd Frank,SECHere is Part II of Ken Berg’s analysis of constitutional defenses that have been raised in response to the SEC’s increased use of administrative proceedings. In the interest of full disclosure, note that the Malouf case referenced towards the end is one that Heidi VonderHeide and I are handling. In addition, it also worth mentioning… Continue Reading
By Ken Berg on Posted in Administrative Proceedings,Defenses,SECThis is the first in a series of posts by my partner, Ken Berg, discussing the constitutional defenses to SEC administrative enforcement actions, which we are called upon regularly to defend. Each subsequent post will discuss one of the constitutional issues and report the current state of the law as to that defense. Ken’s next… Continue Reading
By Alan Wolper on Posted in Examination,RIA,SECLet’s chalk this one up to “great minds think alike,” or maybe just “minds think alike.” You may recall that in his recent letter to member firms that accompanied FINRA’s 2017 Exam Priorities Letter, FINRA CEO Robert Cook said, “starting this year, we will publish a summary report that outlines key findings from examinations in… Continue Reading
By Alan Wolper on Posted in Administrative Proceedings,Disciplinary Process,Enforcement,SECMany industry authors – including me[1] – have devoted a lot of attention lately to the SEC’s increased use of Administrative Proceedings (rather than Federal court cases) in recent years, and questioned the fairness of such proceedings, given their relative lack of discovery tools, the short timeframe provided within which to prepare a case for… Continue Reading
By Alan Wolper on Posted in Administrative Proceedings,appeal,Disciplinary Process,Enforcement,SECWednesday morning marked the confluence of two events. First, like the rest of the world, I awoke to the reality of the results of the presidential race. Then, as soon as I got to the office, I received the results of a case (on which I have previously blogged) that the SEC’s Division of Enforcement… Continue Reading
By Alan Wolper on Posted in Administrative Proceedings,Disciplinary Process,Enforcement,SECOne of my colleagues and I were busy the last two week defending an SEC administrative proceeding out-of-town, so I have not had much chance to blog. But…there was one development during our hearing that merits some immediate attention. My client has been accused, essentially, of making a number of material misrepresentations and omissions in… Continue Reading
By Alan Wolper on Posted in AML,Compliance,Disciplinary Process,Enforcement,FINRA,SEC,SupervisionIf 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… Continue Reading
