The SEC recently commenced an enforcement action against an investment advisory firm and its principal in connection with the failure to disclose material conflicts of interest in connection with new mutual funds that the firm recently created and managed. The SEC is seeking disgorgement and an injunction against the firm and its principal. Clients of… Continue Reading
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
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 that highlights client-issues and risk avoidance techniques for broker-dealers and investment advisors. We hope you’ll take a listen.
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
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
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
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
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
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
The Department of Labor delivered on a longstanding but controversial promise when it recently proposed a fiduciary duty rule for all brokers who work with retirement accounts. The primary purpose of the proposed rule is avoidance of conflicts of interest. If the proposed rule becomes final in its current form, it will have the following… Continue Reading
At least one New York City official would answer that question in the negative. The city comptroller released a proposal that would require a financial advisor to clearly state whether he or she must act in the investor’s best interests. In other words, do what the SEC has yet to do through a uniform fiduciary… Continue Reading
We are pleased to share with everyone Josh Horn’s excellent guidance on RIA conflicts of interest, recently, published in the Practical Compliance and Risk Management for the Securities Industry, a professional journal published by Wolters Kluwer Financial Services, Inc. See PCRM_01-15_Horn-Shah-C3.
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
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
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
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
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
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
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
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
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
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