In this day and age of instant information and overstretched supervisory personnel, you have to be careful to avoid forgoing a very useful supervisory tool. Meeting face to face with those associated persons under your supervision on a regular basis could mean the difference between routing out rogue advisors and being subject to regulatory and… Continue Reading
The SEC recently charged four investment advisors who allegedly used free dinners to entice older clients to their firm. At these dinners, these individuals allegedly provided fraudulent marketing materials to the attendees and ultimately did not invest all of the money that they were given. Granted these four advisors may just be bad apples and… Continue Reading
Unlike lawyers, especially litigators, the business model of a financial advisor is not dependent upon clients being stupid. Instead, financial advisors depend on their clients making smart decisions after full disclosure and consideration after speaking with their financial advisor. So what do you do when clients make stupid decisions? In defending brokers over the years,… Continue Reading
Over the years that I have defended broker-dealers and investment advisors, a more robust overview of outside business activity (OBA) disclosures would have gone a long way to disprove a number of claims. So where did these firms go wrong? The biggest issue that I have seen is a firm’s willingness to take the OBA… Continue Reading
In the near 20 years that I have been defending financial advisors against claims, many of which brought by seniors, the biggest issue that I have seen is the failure to document the file in a proper manner. Why does this matter you may ask? First and foremost, the way a file is documented tells… Continue Reading
It is no secret that FINRA and the SEC are sharply focused on issues regarding elder clients, including severe disciplinary action. There is another elder “issue” that must be kept in the forefront as well; senior designations. Senior designations are “certifications” that financial advisors tag onto their other designations like CFA, etc. Such designations are… Continue Reading
FINRA recently barred a registered representative and fined that person $52,270, which represented the commissions he received from the sale of debentures to 12 senior investors. So what was so bad about those transactions? For one, the high commission investments were not suitable for these elder investors. Second, there were misleading statements made to seven… Continue Reading
In a recent SEC enforcement action, a registered representative was suspended for 6 months and fined $75,000 for, among other things, forwarding confidential client information from his personal email to a former registered representative who maintained the initial client relationships. The representative also used his personal email to conduct firm business. In some instances, he… Continue Reading
FINRA has identified that firm culture is in its cross-hairs. But what is firm culture? Trying to figure out what’s meant by firm culture reminds of my law school days studying First Amendment law and, in particular, cases addressing pornography. A former Supreme Court Justice, Potter Stewart, seemed to get it right when he said… Continue Reading
A recent AWC demonstrates the old Watergate adage that the cover-up is always worse than the crime. In this AWC, FINRA suspended a registered representative for ten (10) months and fined her $15,000. Among other things, the representative entered inaccurately identified her assistant as the person placing trade orders where the assistant was the only… Continue Reading
As we previously blogged about (here and here), FINRA is focusing on your firm’s culture as its top priority this year. FINRA is planning to meet with your executive, compliance, legal, and risk management teams to discuss “how your firm communicates and reinforces those values directly, implicitly and through its reward system”, and in particular, “how… Continue Reading
Client relationships and expectations can be the source of success and liability at the same time. Ernie Badway and I will be speaking on May 17 in New York City at a regional conference of the National Society of Compliance Professionals. We will be speaking about risk avoidance techniques that you can use in the… Continue Reading
FINRA has issued an investor alert involving high-yield CD offers that are really bait for the sale of a high commission investment. Apparently, FINRA has received calls on its senior hotline making it aware of a sales practice that involves enticing a client in to the office to purchase a CD and then being sold… Continue Reading
With the exception of those of you who have literally been asleep for the last few years, you are well-versed in the attention FINRA and the SEC are giving to issues surrounding elder investors. Among other things, there is a real focus on elder abuse. Some commentators believe that all of this attention may inevitably… Continue Reading
Other than the non-defined “culture”, FINRA’s 2016 exam priorities are also focused on supervision and risk management. At least these categories are a bit more defined so that you are not left guessing what FINRA means. Under these broad topics, FINRA is focused on four primary areas, which include: Management of conflicts of interest, including… Continue Reading
When faced with a customer complaint, the key is what you do next. In the last of our podcast series, Ernie Badway and I discussed what firms should do when confronted with a customer complaint. Enjoy.
FINRA released its 2016 Exam Priorities yesterday, and its top priority ventures into a very grey area. FINRA has announced that beginning this year, it will formalize a process of assessing “firm culture”. In doing so, FINRA appears to be focused primarily on ethics and conflicts of interest and insists that it “does not seek… Continue Reading
As you may know, FINRA, last April, launched a senior helpline to address issues pertaining to senior investors. According to recent reports, FINRA received calls on many different issues such as how to read an account statement up fraud targeted to senior investors. FINRA has reported that some of these calls resulted in follow-up calls… Continue Reading
The SEC is conducting an exam sweep that focuses on retirement advice being given to clients of investment advisors and broker-dealers. Some commentators see this as a turf war between the SEC and the Department of Labor (DOL) because the sweep focuses on things that may come under the DOL’s jurisdiction. Whether the exam… Continue Reading
As the New Year dawns, financial firms should only expect greater and more sophisticated attacks. After all, not only do you house personal identifying information, you also have access to client funds. In a recent Investments News round-table, this threat was considered in more detail. There were a number of concerns noted, which include: Email.… Continue Reading
Most people say that New Year resolutions are only as good as the paper on which they are written. Notwithstanding that ringing endorsement, I will give it a shot. Here are some things that you should be resolved to doing in the New Year: Read the SEC and FINRA exam priority letters that each issue… Continue Reading
As of December 12, 2015, FINRA will release Form U-5s within three business days of a member firm’s submission, instead of the fifteen days currently provided for under Rule 8312. The current version of the rule was meant to provide the departing registered representative ample opportunity to comment on the disclosure either though a Form… Continue Reading
Ernie Badway and I have prepared a series of podcasts dealing with the relationships between broker-dealer, investment advisors and their customers. Here is the third part of that series focused on risk avoidance techniques. Here is the link: https://soundcloud.com/fox-rothschild-llp/securities-best-practices.
Ernie Badway and I have prepared a series of podcasts addressing risk avoidance issues for broker-dealers and investment advisors. The latest in the series addressing issues surrounding elder clients. We hope you’ll take a listen.