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Category Archives: Financial Industry Trends

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Why Should You Care About Cyber-Security

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement

The short answer to this question is that the SEC and FINRA care.  Both regulators have made this issue an exam priority for the year, and it was recently a focus of an SEC roundtable.  We hear of data breaches on nearly a daily basis at retail stores, to name a common target.  But what… Continue Reading

FINRA “Sweeping” Firms for Cyber-Security

Posted in Cyber-Security, Financial Industry Trends, FINRA Compliance

We keep saying it, and we will keep saying it, cyber-security issues will not go away. Now, FINRA has notified its member firms that it will begin assessment examinations regarding controls, procedures, approaches and management of cyber-security threats.  See http://www.finra.org/Industry/Regulation/Guidance/TargetedExaminationLetters/P443219.  In particular, FINRA examiners will review business continuity plans, service provider arrangements, other third party vendor agreements, reporting lines,… Continue Reading

Is This The Beginning Of The End To Expungment Agreements

Posted in Arbitration, Broker-Dealer Regulation, Expungement, Financial Industry Trends, FINRA CRD, Registered Representatives

A frequent tool for settlement was to make a stipulated award that included expungement of the registered representative’s U-4 a condition of settlement.  FINRA recently announced that it is “developing rule changes that would prohibit the practice of conditioning settlements on an investor’s agreement not to oppose expungement.” It should come as no shock that… Continue Reading

SEC’s New Task Force on Financial Reporting Fraud

Posted in Accounting Standards, Broker-Dealer Regulation, Financial Industry Trends

The Securities and Exchange Commission announced three new enforcement initiatives, including a task force aimed at rooting out potential fraud involving issuer disclosures and audit failures.  See http://www.sec.gov/news/press/2013/2013-121.htm. The SEC said its Financial Reporting and Audit Task Force will expand the Enforcement Division’s efforts to identify securities law violations relating to the preparation of financial… Continue Reading

THE FIDUCIARY STANDARD AND THE SEC-DOL TUG -OF -WAR

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends

The DOL is working to redefine the definition of the term “fiduciary” for retirement plan purposes, including individual retirement accounts.  The SEC’s recent request for data on a possible rulemaking effort to impose a fiduciary standard seems to fail to take into account the DOL’s ongoing reform efforts. The DOL project is broader while the… Continue Reading

What Do Ethics Have To Do With It?

Posted in Broker-Dealer Regulation, Compliance and Supervision, Corporate Governance, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

Having a strong compliance program is not the end of a firm’s obligation to itself and its customers. All firms should also make sure that it has a strong ethics program. An ethics program should include, among other things, the following: A written code of conduct; Having an ethical tone at the top of the… Continue Reading

So You Don’t Think You Need A Business Continuity Plan; Here Are 15 Considerations Why You Should Have One

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, Investment Adviser Regulation, Registered Representatives, SEC Compliance

Now that summer is in its waning days, the hurricaine season is about to take off.  Hurricaine Sandy had a devastating impact on the financial markets, closing the equity markets for two days and some firms for at least a week.  The SEC, CFTC and FINRA recently provided financial firms a framework to improve their… Continue Reading

Do You Want To Know What Keeps The Regulator Up At Night

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Investment Adviser Regulation, SEC Compliance, SEC Enforcement, Social Media

At a regulator’s round table during a recent National Society of Compliance Professionals meeting, the regulators framed out those issues that are keeping them up at night.  The issues include: The increasing complexity of investment products. Social media beyond things like Twitter or LinkedIn. Cyber security. Cyber fraud; i.e. hacking into customer accounts. AML issues… Continue Reading

Who Wants To Know What FINRA Has Planned For Your CRD

Posted in Arbitration, Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Registered Representatives

The Financial Industry Regulatory Authority (FINRA) recently announced that it expects to send a proposal to the SEC to make it easier for registered representatives to clear their record of black marks.  Up until now, the process for expungement has been drawn out and extremely limited in application. The primary issue FINRA is attempting to… Continue Reading

What Broker-Dealers Need To Know About FINRA

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

Recently, FINRA publicized penalties against three companies and associated individuals for failing to implement adequate anti-money laundering procedures.  These fines should serve as a warning to the industry as a whole that FINRA is very focused on AML policies and procedures. In its announcement, FINRA noted that the firms failed to implement adequate procedures to… Continue Reading

What Investment Advisers Need To Know About The SEC

Posted in Compliance and Supervision, Financial Industry Trends, Investment Adviser Regulation, SEC Compliance

The SEC recently announced that its top priority is to increase the number of investment adviser examinations it conducts on an annual basis.  Considering that the SEC only examined 8% of all investment advisers in 2012 (where 40% have never been examined), the SEC could only increase the number of such examinations. The talk, for… Continue Reading

So is it now really the beginning of the end of arbitration

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, Public Customer Arbitrations

The North American Securities Administrators Association on behalf of state securities regulators, following 37 members of Congress, recently asked the SEC to exercise its authority under Dodd-Frank and do away with mandatory arbitration agreements.  Consumer groups have also jumped into this fray. Does this signal the beginning of the end of arbitration clauses in customer… Continue Reading

So What Do You Need To Do With BrokerCheck

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, FINRA Compliance, Social Media

While many brokers breathed a sigh of relief when FINRA withdrew its proposal requiring members to include a “prominent description of and link to” BrokerCheck on their web sites and social media pages, this is probably not the end of this matter. Many firms complained about the proposal because it presented many administrative nightmares; such… Continue Reading

Did You Know That Some Of Your Products Require Heightened Supervision

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

In a recent speech, FINRA CEO, Richard Ketchum, told broker-dealer compliance officers that, although firm compliance programs have improved, there must be heightened supervision when it comes to complex products.  In light of these comments, you must assume that the supervision over the sale of complex products will be a focus of your next examination…. Continue Reading

Some Things You Should Know About Compliance And Ethics

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, SEC Compliance, SEC Enforcement

At a recent conference held by the SEC, a panel highlighted the importance of compliance and ethics for broker-dealers.  The big take away from the conference was that a strong compliance program must have a solid ethical foundation. In other words, a compliance program is not simply making sure that your representatives check the right… Continue Reading

So You Thought You Wanted To Be A Securities Lawyer

Posted in CFTC Enforcement, Federal and State Criminal Activities, Financial Industry Trends, FINRA Enforcement, NFA Enforcement, SEC Enforcement

Lawyers have often been the brunt of cruel jokes. But now, a recent study reported on by the Bureau of National Affairs shows, lawyers are the target of securities regulators. Why the sudden interest? For one, cooperation initiatives between regulators and those caught violating securities law convince these people to turn on their lawyer who… Continue Reading

Who Wants To Know About Enhanced FINRA Discipline

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, FINRA Enforcement

A recent study by the Sutherland Asbill law firm revealed that FINRA brought 4% more disciplinary cases in 2012 as compared to 2011.  In doing so, FINRA jacked up its fines another 15%, for a grand total of $78 million. Besides FINRA showing it still has muscle to flex, what should member-firms take away from… Continue Reading

A “New” Statute for the Department of Justice

Posted in Federal and State Criminal Activities, Financial Industry Trends

The DOJ has been making increasing and aggressive use of the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) FIRREA was an outgrowth of the savings and loan crisis in the late 80’s and early 90’s.  The DOJ is looking to prosecute and obtain civil penalties by using this statute.  This statute allows the DOJ to bring… Continue Reading

One Thing An RIA Need Not Worry About.

Posted in Dodd-Frank, Financial Industry Trends, Investment Adviser Regulation, SEC Compliance, SEC Enforcement

Ever since Dodd-Frank, there has been much concern in the RIA world regarding who would be its regulator.  At this point, RIAs can dispense with any concern that FINRA will be its regulator because FINRA pulled its hat out of the oversight ring, at least for now. Even thought FINRA spent nearly $2 million lobbying Congress… Continue Reading

“It’s Deja Vu All Over Again”; The Uniform Fiduciary Duty Standard

Posted in Broker-Dealer Regulation, Dodd-Frank, Financial Industry Trends, FINRA Compliance

One of the greatest philosophers of our time, Yogi Berra, must have had the debate over the uniform fiduciary duty standard when he penned this line.  Yes, believe it or not, the debate is about to resume. The SEC is yet again working on possible recommendations regarding a uniform fiduciary duty for investments advisors and… Continue Reading

How To Be Great At Using Social Media

Posted in Financial Industry Trends, Social Media

In a recent InvestmentNews article by Stephanie Sammons, she highlighted that the major problem financial advisors have with social media is “knowing what to share on social networks.”  Assuming that your firm allows for you to market your services through social media, this article gave sound guidance on what customers and potential customers would want to… Continue Reading

Moving Firms Maybe Getting More Difficult and Possibly Anti-Competitive?

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance, Raiding/Moving Firms

The FINRA Board of Governors is considering implementing new rules that will require brokers to disclose their compensation when they move firms. In many respects, this will cause issues for those who move firms periodically to obtain bonuses and other compensation increases.  These brokers will be required to disclose to their clientele what their compensation package… Continue Reading

Sandy Causes FINRA to Reflect on Business Continuity Plans

Posted in Broker-Dealer Regulation, Financial Industry Trends, FINRA Compliance

After Hurricane Sandy caused such devastation in the Northeast, FINRA began to question firms as to their business continuity plans and if precautions were in place. FINRA has asked these firms about their relocation, outsourcing, and alternative trading plans.  FINRA has not received responses, but it expects these firms to respond shortly.  FINRA will likely use these… Continue Reading