I get the fact that anyone silly enough to work for a broker-dealer knowingly chooses to live in a fishbowl. Thanks to BrokerCheck, you can very easily learn more about a registered representative than you can about, say, a...more
I have always found it enlightening – and a bit scary – to talk to my clients about FINRA Rule 2210, the advertising (or “communications with the public”) rule, to see what they know about it. It’s a long, dense rule, so I’m...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
LPL may be the biggest BD in the country, with 21,500 reps operating out of almost 13,000 branch offices. Heaven knows how much money it brings in every year, but, goodness, it must be a lot. And good thing, too, given how...more
1/20/2021
/ Annual Reports ,
Board of Directors ,
Broker-Dealer ,
Comptroller ,
Financial Industry Regulatory Authority (FINRA) ,
Investment Adviser ,
OCC ,
Regulatory Oversight ,
Regulatory Requirements ,
Securities and Exchange Commission (SEC) ,
Supervision
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
“The SEC score(s) one for the digital age.” These are the words of SEC Commissioner Heist, though, not my own. After a nearly year-long comment period, the SEC announced last week that it was replacing its former advertising...more
12/31/2020
/ Advertising ,
Compliance ,
Endorsements ,
Form ADV ,
Investment Adviser ,
Investors ,
Marketing ,
New Rules ,
Ratings ,
Securities and Exchange Commission (SEC) ,
Supervision ,
Third-Party
Not too long ago, I posted a blog complaining that FINRA’s Nominating Committee had basically abdicated its responsibility to identify suitable candidates for certain seats on FINRA’s Board. Perhaps not surprisingly, I never...more
There is a little corner of the FINRA world that most people never have the need or desire to visit, and that’s the not-so-quaint village of statutory disqualification. SD, for short. I have written about this sad place...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
Attentive readers will recall that a couple of weeks ago, I mentioned in a preface to great post from Chris about expungement becoming an endangered creature due to changes in FINRA rule that I was about to embark on a...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
Having completed my Enforcement hearing conducted by Zoom – more about that in an upcoming post – I can finally turn my attention back to some matters that arose while I was busy.
One that stood out for the sheer (and...more
As the Fourth Circuit Court of Appeals made clear a week or so ago, serving as a FINRA arbitrator seems rather apropos in a world where the score is not kept in kids’ baseball games (to avoid there being any “losers”), and...more
For the third year, FINRA has published its now-annual (apparently) statistical accounting of its membership and the registered representatives who work for those firms. I went back and looked the blogs I posted after the...more
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
I hope that you have had the chance to enjoy Jessica Hopper’s paean to Rule 8210 in her recent blog posted on FINRA’s website. Very disturbing, and for all the old reasons.
First, once again, she starts by patting herself –...more
After having proudly served for decades, and surviving a dramatic face-lift in 2012 (when old NASD Rule 2310 was replaced by shiny new FINRA Rule 2111), it seems that the “suitability rule,” as we’ve come to know it, has, at...more
I have blogged before about hold recommendations. Surprisingly – at least to me – the statistics I get from the publisher of this blog reveal that more people have read that particular post than anything else I have written...more
Two years ago, when it was just an ugly rule proposal, I blogged about FINRA’s intent to modify its MAP rules to “Incentivize Payment of Arbitration Awards.” Sadly, FINRA once again showed it spinelessness by pushing these...more
Last year, I wrote a piece called “Wedbush Learns That It’s Not Enough Just To Spot Red Flags.” As the title suggests, it analyzed an SEC decision in which Wedbush was sanctioned because it failed in several respects to...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