While it is pretty likely that anyone reading this is already familiar with the Wells process, I am going to start with a short history lesson. Way back in 1972, the SEC created an Advisory Committee to take an objective look...more
I have watched enough medical shows over the years, from the awesome St. Elsewhere to the never-ending Grey’s Anatomy, to have heard umpteen times that the Hippocratic Oath includes the admonition that doctors “do no harm.” ...more
So, after all the hubbub about how Reg BI was going to turn the brokerage industry on its head, given the new standard of conduct – more like that of a fiduciary – that it was imposing on BDs and registered reps, I’m sure...more
As the song goes, time keeps on slipping, slipping, slipping into the future. While Steve Miller may not have had FINRA and the SEC in mind when he wrote that lyric, the shoe certainly fits. Because here’s the thing about...more
About a month ago, the SEC announced a settlement in a modest little case that has, nevertheless, managed to garner a lot of attention. This is a result of the fact that one of the respondents was the CCO, i.e., the Chief...more
Last week I posted a blog about the dangers of not heeding findings made during a regulatory exam, at least findings of clear, undisputable compliance issues that cannot be meaningfully defended. Today I am writing to...more
There is no question in my mind that the quality of FINRA examiners is a bit uneven. Some are smart and insightful and helpful; others are, well, not. Most of the time, they do know what they’re talking about. That means...more
There are certain topics that broker-dealers have been encountering for decades, yet continue unnecessarily to wrestle with due to the absence of clear guidance from the regulators. I have written about one such topic...more
Happy New Year! I hope you had an enjoyable holiday season. At least happier than that of JP Morgan Securities, which, right before Christmas, got to write checks to the SEC and the CFTC totaling $200 million. That’s a...more
I am still catching up on things that happened over the last couple of months, as I dig myself out of the hole created by (finally) completing a 39-day FINRA arbitration (SOC filed in 2014, hearing started in 2019)....more
Not too long ago, a single, small BD experienced a bizarre combination of regulatory overzealousness and regulatory indifference, by the SEC and FINRA, respectively. These things, sadly, happen all the time, but what...more
FINRA Enforcement has often been accused (again, admittedly, by me, and not too infrequently) of going after the “low-hanging fruit,” that is, taking the easy case when it presents itself. Putting aside the question whether...more
FINRA, of course, has lots, and lots, of rules. Heck, it has rules about making rules. The things that RRs can and cannot do per those rules are strictly proscribed, mostly in great detail. Things that ordinary people can...more
My friend and former colleague, Brian Rubin, publishes annually his analysis of FINRA Enforcement cases, spotting trends in terms of the number and types of matters it brings, the sanctions meted out, etc. It is an excellent...more
Almost three years ago, in Reg Notice 18-08, FINRA wisely (but, nevertheless, still a bit late to the party) proposed to revise its own prior guidance regarding the troublesome intersection between outside business activities...more
A long time ago, long before there existed any whistleblower statutes, I had a client – a CCO of a broker-dealer – who discovered some pretty funky trading at his firm. As he tells the story, when he went to see his boss (who...more
1/29/2021
/ Broker-Dealer ,
Chief Compliance Officers ,
Compliance ,
Department of Justice (DOJ) ,
Documentation ,
Due Diligence ,
Enforcement Actions ,
Ethics ,
Financial Industry Regulatory Authority (FINRA) ,
Investment Adviser ,
Securities and Exchange Commission (SEC) ,
Settlement ,
Supervision
Historically, one of the surest ways to get yourself permanently barred from the industry is to forge a customer’s signature on something. According to the pertinent Sanction Guideline, at a minimum, a forgery, that is, a...more
1/25/2021
/ Acceptance ,
Broker-Dealer ,
Consent ,
Customers ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Fines ,
Forgery ,
Professional Disciplinary Actions ,
Securities and Exchange Commission (SEC) ,
Settlement ,
Waivers
While undoubtedly FINRA will be issuing its annual “examination priorities” letter any day now, that is hardly the best way to figure out exactly what FINRA is paying attention to now (as that letter kind of reads the same,...more
We have frequently blogged here about the degree of attention that regulators pay to Chief Compliance Officers, and whether it is proper that they sometimes are named individually in Enforcement actions. And we are hardly...more
As should be clear to readers of this Blog, I find that Enforcement actions often provide the best guidance in terms of what regulators deem to be unacceptable conduct, which is very useful when dealing with subjective...more
I dare you. In fact, I double-dog dare you to figure out how or why FINRA decides to charge willfulness in some cases but not in others. Bottom line is that it is nearly impossible (except if you’re a big firm, in which case...more
10/21/2020
/ Broker-Dealer ,
Enforcement Actions ,
Financial Industry Regulatory Authority (FINRA) ,
Financial Institutions ,
Investment Adviser ,
Misrepresentation ,
Professional Disciplinary Actions ,
Registered Representatives ,
Sanctions ,
Securities and Exchange Commission (SEC) ,
Settlement
The longer I do this, the more apparent it becomes just how little anything changes. Sure, some things do change, a little. Rule numbers may get updated, as Rule 2310 becomes Rule 2111. Things that once may have been done...more
Seems like just days ago I blogged about Jessica Hopper and her commitment to providing restitution to customers. Since I posted that blog, there were two other settlements (which I added to that blog as updates) in which...more
I may have said this before in another post, but in my opinion, whether a baseball umpire is good or bad is not a matter of whether he has a low strikezone, a high strikezone, or a wide one. What matters is that whatever that...more
I hope that, by now, everyone understands and appreciates just how freakishly sensitive the regulators are to misconduct involving the wrongful sharing of confidential information. If you don’t, however, FINRA was kind enough...more