It is a nasty thing when one becomes statutorily disqualified. It means either leaving the industry, permanently, or having to file an MC-400 and trying to convince FINRA that you should be permitted to remain in the industry, albeit subject to heightened supervision and extra scrutiny from FINRA. I have previously blogged about statutory disqualification,
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Looking For A Silver Lining: Post-Election Thoughts On The SEC
By UB Greensfelder on
Wednesday 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…
When It Comes To Churning, FINRA Knows What’s Best For Investors
By UB Greensfelder on
Since I first started practicing law back in the 1980s, customer complaints against brokers have often involved allegations of “churning,” which is deemed to be fraud. Now, as it was 30+ years ago, to prove a churning claim, a customer needs to demonstrate that (1) the broker acted with scienter, which is defined to…
It’s Official: The SEC Has No Sense Of Humor
By UB Greensfelder on
One 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…
Pick Your Poison: Given What A Jury Can Do, Is Arbitration Really That Bad?
By UB Greensfelder on
Posted in Arbitration, FINRA
Some of my clients simply cannot enough bad things about the arbitration process. It is expensive. It is unfair. There’s no industry panelist anymore. Claimants can get away with anything. Panels are sometimes comprised of people who care more about how many sessions they can get paid for than the merits of the case. Or…
Advertising Case Loss Reveals Limits To FINRA’s Jurisdiction Over Outside Business Activities
By UB Greensfelder on
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…
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…