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Category Archives: Registered Representatives

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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

So Who Really Thinks They Know Their Customers

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, Registered Representatives, Uncategorized

As the year winds down to an end, financial advisors should be mindful of next year and the years to come.  Now is as good a time as any to make sure that you know your customer.  The year-end gives you a unique opportunity to get in front of your clients and revisit the year… 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

Forget Including A Bar Of Whistleblower Tips In Settlement Agreements

Posted in Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Public Customer Arbitrations, Registered Representatives, Uncategorized, Whistleblowers

FINRA recently warned that firms could face disciplinary action if they enter into settlement agreements that bar customers or former employees from reporting wrongdoing at the firm.  Although FINRA recognized that confidentiality provisions were acceptable, it noted that they have to be written in such a way to authorize the individual to contact FINRA or… Continue Reading

What Do FINRA’s Enforcement Statistics Mean

Posted in Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Registered Representatives, Uncategorized

At the halfway point of the year, the Sutherland Asbill firm has issued its report on FINRA’s fines to date.  That report reflects that, although fines are on a record pace this year, the number of actions by FINRA is behind pace.  So what does this mean?  The first step is to look at the… 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

Broker-Dealers Must Now Investigate Potential Registered Representatives

Posted in FINRA Compliance, FINRA CRD, Registered Representatives

FINRA approved new rules to require member firms to verify the accuracy of information provided on a prospective applicant’s Form U4.  See http://www.finra.org/Newsroom/NewsReleases/2014/P493588. The new FINRA rules will now force firms to adopt new written procedures to verify information from public sources of available criminal, bankruptcy, and litigation records.   FINRA also stated that it will review public… Continue Reading

Is “Big Brother” Such A Bad Thing

Posted in Broker-Dealer Regulation, Corporate Governance, FINRA Compliance, FINRA CRD, FINRA Enforcement, Ponzi Schemes, Registered Representatives

FINRA recently announced a change to the supervision rule to require hiring firms to conduct background checks on new employees.  This rule change raises the question; what have member firms been doing all along.  In this day and age of instant information, having a new registered representative complete his/her U-4 should have only been a… Continue Reading

Who Wants To Know Something About FINRA’s New Written Procedures Rule?

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

New FINRA Rule 3110 (effective December 1, 2014) sets out various written procedures and requirements for member firms.  You should pay particular attention to these rules because they suggest those areas of focus in any upcoming examination.  Among other things, new FINRA Rule 3110.06 provides for the review of correspondence and internal communications.  Importantly, this… Continue Reading

What Do You Need To Know About FINRA’s New Supervision Rules

Posted in Broker-Dealer Regulation, FINRA Compliance, Registered Representatives

Effective December 1, 2014, there will be new rules for broker-dealer supervision.  With these changes, FINRA is placing more burdens on a firm’s supervisory system.    With respect to “supervisory systems”, Rule 3110 covers the following:  Establishing and maintaining written procedures and designating principals responsible for supervision. Designating offices of supervisory jurisdiction. Designating OSJ/non-OSJ branch principals…. 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

Fixed-Income Commissions allowed for Brokerage and Research Services

Posted in Broker-Dealer Regulation, Compliance and Supervision, Registered Representatives

The Securities and Exchange Commission Division of Trading and Markets granted relief for institutional asset managers participating in a brokerage firm’s client commission arrangements.  See Carolina Capital Mkts. Inc., SEC No Action Letter, avail. 7/30/13; http://www.sec.gov/divisions/marketreg/mr-noaction/2013/carolinacapital-073113-15a.pdf. Specifically, the Staff said it would not object if instructional asset managers receive eligible third-party brokerage and research services… Continue Reading

RETIRED BROKERS MAY CONTINUE TO COLLECT COMPENSATION

Posted in Broker-Dealer Regulation, Raiding/Moving Firms, Registered Representatives

The SEC’s Division of Trading and Markets assured a broker-dealer that a retiring registered representative would not risk enforcement action if, after termination of  the employment, he or she received certain compensation from the firm without maintaining his or her status as a registered associated person.  See Packerland Brokerage Services, SEC No-Action Letter, avail. 3/18/13… Continue Reading

Is There Any Reason To Arbitrate Customer Complaints

Posted in Arbitration, Raiding/Moving Firms, Registered Representatives

On September 18, the SEC approved a FINRA proposal that essentially does away with the ability to have an industry arbitrator serve on your panel.  So the question becomes, why bother arbitrating customer complaints. Without an industry arbitrator on the panel, you have no choice but to hire an expert witness because there will be… Continue Reading

So What Do FINRA’s Disciplinary Statistics Mean For You?

Posted in Broker-Dealer Regulation, FINRA Compliance, FINRA Enforcement, Registered Representatives

As noted in a report by the Sutherland Asbill firm, although over the first six months of 2013 FINRA has brought nearly the same number of disciplinary cases as the same period in 2012, fines are down significantly.  In addition, FINRA’s areas of focus have also changed.  So what does this mean for you? For… 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

Is FINRA Going To Be Nicer To Registered Representatives?

Posted in Arbitration, Broker-Dealer Regulation, Registered Representatives

That is the question on many people’s tongue these days in light of a recent FINRA announcement.  Apparently, FINRA is working on two separate initiatives to revamp its expungement process.  As it stands now, the process can be long and difficult.  A registered representative must prove to a panel that the customer’s complaint was false,… Continue Reading

What Does FINRA Rule 3270 Mean To You

Posted in Broker-Dealer Regulation, Compliance and Supervision, FINRA Compliance, FINRA Enforcement, Money Laundering, Ponzi Schemes, Registered Representatives, Social Media

The outside business activities of registered persons have the potential for causing your firm significant liability, especially where those activities are unknown to the firm, involve firm customers and constitute a fraud.  FINRA 3270 only requires the registered person to provide notice to the firm before engaging in the activity, but should the firm do more…. 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

Do You Want To Know One Of The Greatest Risks To Your Practice

Posted in Compliance and Supervision, Public Customer Arbitrations, Registered Representatives, Securities Litigation

In the years that I have defended broker-dealers and investment advisors from customer-initiated complaints, a common theme has emerged.  The bulk of the complaints seem to come from older clients.  Unfortunately, the aging baby boomers may exacerbate this issue. In a recent Investment News article by Mary Beth Franklin, she reported on a recent study reflecting… Continue Reading

Who Wants To Know How To Weed Out Rogue Stockbrokers

Posted in Compliance and Supervision, Dodd-Frank, FINRA Compliance, Registered Representatives, SEC Compliance

My partner, Ernest Badway, recently blogged about the dangers of a lawyer referring a client to a rogue stockbroker.  The question for the broker-dealer/investment advisors is how do you uncover rogue brokers or prevent them from infecting your firm. In all of the years that I have defended broker-dealers and investment advisors in cases involving… Continue Reading

Beware of the Rogue Stockbroker

Posted in Broker-Dealer Regulation, Law Firms and Lawyers, Registered Representatives, Securities Litigation

We take a step back and speak directly to attorneys for a change, in particular, those lawyers who may recommend stockbrokers to their clients.  In New York, attorneys are subject to the tort of negligent referral if they were to refer such a stockbroker, who then causes damage to the client.  Consequently, prior to making any such… Continue Reading