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Category Archives: Conflicts of Interest

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SEC Exam Priorities; It Seems Like Deja Vu All Over Again

Posted in Breach of Fiduciary Duty, Broker-Dealer Regulation, Conflicts of Interest, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

Those famous words of the immortal Yogi Berra hold true when it comes to the SEC exam priorities for 2016. Among those at the top of the list are two familiar friends; protecting retail investors and investors saving for retirement. It is clear that the SEC is looking in particular toward how retail firms are… Continue Reading

Who wants to know more risk avoidance techniques

Posted in Breach of Fiduciary Duty, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, Securities Litigation

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.

Who wants to hear about pitfalls in the advisor/broker-client relationship

Posted in Arbitration, Breach of Fiduciary Duty, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement, Registered Representatives, SEC Compliance, Securities Litigation

Ernie Badway and I have prepared a series of podcasts that highlights client-issues and risk avoidance techniques for broker-dealers and investment advisors.  We hope you’ll take a listen.  

Why elder issues are not just about your clients

Posted in Books and Records, Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, Cyber-Security, FINRA Compliance, Ponzi Schemes, Registered Representatives, SEC Compliance, SEC Enforcement, Securities Fraud, Securities Litigation

The SEC and FINRA have made it very clear that they are focused on senior customers and elder abuse. Granted, firms must be focused on the elder customers, but, at the same time, must also focus on the fact that many advisors are included in the graying generation. What are firms to do about that?… Continue Reading

Do you want to know 5 things that lead to a culture of compliance

Posted in Books and Records, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, FINRA Compliance, Registered Representatives, SEC Compliance, SEC Enforcement

In a recent blog, Michael Volkov noted five ingredients to ensure a culture of compliance. Why should you care? It is quite simple, firms that do not promote a culture of compliance are bound to find themselves face to face with their regulator, and not at a holiday party sharing cocktail weenies. So what are… Continue Reading

Who wants to know five compliance trouble areas for state-based advisors

Posted in Books and Records, Compliance and Supervision, Conflicts of Interest, Financial Industry Trends, Investment Adviser Regulation, State Enforcement

As recently reported in the Investment News, the North American Securities Administration Association (NASSA) reported on the results of state coordinated examinations. The relative good news was that there were 30% fewer deficiencies from 2013 to 2015. These examinations revealed, however, five areas of particular concern for state based investment advisors. These issues are: Not… Continue Reading

What do you need to know about the latest FINRA sweep exam

Posted in Books and Records, Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance, FINRA Enforcement

FINRA recently sent out targeted exam letters focused compensation practices. The intent of this targeted exam is to assess how firms identify, mitigate and manage conflicts of interest when it comes to compensation paid to registered representatives. This limited examination is designed for information gathering purposes and to determine best practices around the sale of… Continue Reading

So who really thinks the SEC is not focused on elder investors

Posted in Breach of Fiduciary Duty, Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement

If there is any question that the SEC is focused on elder investor issues, look no further than its recent program announcement. The SEC initiated a program designed to examine retirement planning guidance. Under this program, the SEC intends to explore whether the compensation advisers receive presents a conflict of interests and, if so, how… Continue Reading

What The Heck Is A Senior Designation

Posted in Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement

That is one of the questions FINRA sought to answer in its recent National Seminar Investor Initiative. FINRA confirmed that many representatives use such designations, but some of them are bogus or no better than a certificate you find as a prize in a cereal box. The problem is that some representatives use these bogus… Continue Reading

What Are You Doing About The New Supervision Rules

Posted in Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement, Registered Representatives

FINRA noted in its exam priorities that it will be focusing on firms’ compliance with the new supervision rules (FINRA Rules 3110, 3120, 3150 and 3170).  These rules became effective on December 1, 2014. Now that two months have passed since their effective date, firms should have taken the changes into account in their written… Continue Reading

Who Wants To Speak With Me, Oh No

Posted in Breach of Fiduciary Duty, Compliance and Supervision, Conflicts of Interest, Registered Representatives

Anyone in a service industry has had that dreaded feeling.  You see your email or caller identification and realize it is “that” client trying to reach you.  The client I reference is that extremely difficult client that we all have. The natural inclination for many of us is to not take the call or respond… Continue Reading

My Client Has Dementia, Now What

Posted in Compliance and Supervision, Conflicts of Interest, FINRA Compliance, Investment Adviser Regulation

What do you do when your elderly client begins to make bizarre withdrawals?  Is there something wrong when your elderly client starts transferring funds to finance a Nigerian soccer teams?  What if a long lost relative comes on the scene and starts influencing the investments and cash withdrawals of an elderly client?  Unfortunately, many financial… Continue Reading

Look Before You Tweet

Posted in Compliance and Supervision, Conflicts of Interest, FINRA Compliance, FINRA Enforcement, Registered Representatives, Social Media

FINRA recently sanction a registered representative for tweets made some time ago.  The offending tweets referenced a stock that he did not disclose that he owned and were otherwise biased and not backed up by facts.  The registered representative was fined $15,000 and given a ten day suspension.  In the larger scheme of things, a… Continue Reading

CONFLICT OF INTEREST BEST PRACTICES

Posted in Conflicts of Interest

FINRA published a report on best practices used by broker-dealers to manage conflicts of interest.  See http://www.finra.org/web/groups/industry/@ip/@reg/@guide/documents/industry/p359971.pd?utm_source=MM&utm_medium=email&utm_campaign=NewsRelease_Conflict_101413_FINAL. The report was based on responses to a sweep letter sent out by FINRA in July 2012, as well as meeting firm representatives and a follow-up questionnaire.  The report focuses on three main areas: broker-dealers’ enterprise-level frameworks to… Continue Reading

Do You Really Want To Be A Dual Registrant

Posted in Broker-Dealer Regulation, Compliance and Supervision, Conflicts of Interest, FINRA Compliance, Registered Representatives, SEC Compliance, SEC Enforcement

One of the priorities of the SEC National Examination Program is dual registrants; entities that provide both brokerage and investment advisory services.  The focus of the program on dual registrants begs the question why a firm would want to be one.  The answer to that question should be an obvious.  Being a dual registrant allows… Continue Reading

What To Make Out Of FINRA’s Proposed Rule On Bonus Disclosures

Posted in Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance, SEC Compliance

Bonuses and other forms of compensation are frequently used by one firm to attract talent away from another firm.  FINRA has now proposed a rule that would require brokers who receive in excess of $100,000 to disclose that payment to their customers.  Does this make any sense?  FINRA’s rationale for the rule is that it… Continue Reading

Should You Breath Easy Because FINRA Enforcement Actions And Fines Decreased In 2013

Posted in Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance

The Sutherland Asbill firm recently released its report regarding FINRA enforcement actions. In all, the report reflects that enforcement actions and fines decreased over the past year.  So what does this all mean? According to the firm, this could be a reflection of the larger financial crisis cases having worked their way through the system.… Continue Reading

What Does A Fiduciary Duty Have to Do with It?

Posted in Broker-Dealer Regulation, Conflicts of Interest, FINRA Compliance, SEC Compliance

As the SEC dawdles and contemplates whether there should be a uniform fiduciary duty, Robert Ketchum, chairman and chief executive of FINRA, has recently laid down the gauntlet when he called for a cultural shift to where broker-dealers act in the best interests of their clients. Acting in the best interests of your clients is… Continue Reading

CONFLICTS OF INTEREST MAJOR ISSUE FOR RIAS AND SEC

Posted in Conflicts of Interest, Investment Adviser Regulation, SEC Enforcement

  While the overwhelming majority of registered investment advisers are operating in the best interest of their clients in a very complex business, others do not, according to the SEC.   These bad actors usually are either liars, cheaters, reckless or involved in conflicts of interest.  The former usually face the wrath of regulators sooner… Continue Reading