It was great speaking at the May 17 New York NSCP regional conference on risk issues facing firms where Ernie Badway and I discussed cyber-security, risk issues, regulatory matters, issues involving elder clients and ways compliance personnel can protect themselves. For those of you who could not make the conference, these topics are frequently discussed… 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
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
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.
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
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.
One area of focus for FINRA has been on recidivist registered representatives. A recidivist is an associated person who has repeated rule violations or customer complaints of a specific nature. FINRA has used a risk-based approach in order to be proactive to identify the bad behavior that these undesirable registered representatives tend to display. In… Continue Reading
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
When you are faced with a customer complaint, the single most important thing in my expense is the content of the file. If it is not there, it will not exist in the mind of the factfinder. If it is there, the so-called “film” generally does not lie. Over the years that I have defended… Continue Reading
I recently blogged about the meaning of the “E” in email. For a further discussion of the dangers associated with email, you can listen to this podcast. The moral to the story is think long and hard before you hit that send button. Enjoy!
Our partner, Frank C. Razzano, has recently published an article, entitled “What Lies Ahead: Halliburton v. Erica P. John Fund, Inc.,” in the Securities Regulation Law Journal (Spring 2015). It is a great article discussing a recent United Supreme Court decision dealing with class actions. Kindly let us know if you would like a copy for your review.
Over the years that I have defended financial advisors and their firms, I have frequently spoken and written about ways to avoid the risk of being sued. I prepared a guidebook a couple of years ago that detailed some common sense approaches to risk avoidance. I have updated that guidebook to take into account new… Continue Reading
After the obvious, make and execute on investment recommendations, some are at a loss for what to do next. From my perspective, it is the next step that may mean the difference from having a career without customer complaints to one with them. The key to survival in this competitive industry is to have a… Continue Reading
Recent history shows that FINRA is going after brokers who alter client’s records. This, unfortunately, reminded me of my own bad experience as a young lawyer when defending a broker. That broker had great “contemporaneous” notes of his communications with the client that made the case very defendable. My opponent questioned the authenticity of these… Continue Reading
In what is sure to add more “fuel to the fire,” it was recently reported that the SEC has won every case brought in its administrative courts over the last year. The SEC has not been so successful with its federal court cases, winning 61% of those cases over that same period. Of course, regular blog readers know that the… Continue Reading
The U.S. Court of Appeals for the Sixth Circuit affirmed a dismissal of investors’ securities claims in the wake of a bank liquidation, but left the door open to a possible “silent fraud” claim under Michigan law. See Dailey v. Medlock, http://www.bloomberglas.com/public/document/Thomas_Dailey_et_al_v_Lisa_Medlock_et_al_2014_BL_9430_6th_Cir_Jan. A claim for silent fraud under Michigan law requires a plaintiff to establish… Continue Reading
I recently blogged about the pervasive nature of data breaches and the particular risks presented to this industry. Many firms may think that they are secure because they used a vendor to build a secure environment, but history tells us that is not the case. Cyber-attacks do not always come from a direct hit, but… Continue Reading
A divided U.S. Court of Appeals for the Second Circuit affirmed the dismissal of securities law antifraud claims against a “trusted” investor in the pump-and-dump scheme perpetrated by two defunct broker-dealers, A.R. Baron & Co. and Bear Stearns Cos. Inc. See Fezzani v. Bear Stearns & Co. Inc., 2d Cir. No. 09-4414-cv, 5/7/13, http://op.bna.com/srlr.nsf/r?Open= jkoo-97hryk. … Continue Reading
The California Court of Appeals reversed a lower court’s refusal to compel a dissatisfied investor to arbitrate its dispute with a former associated person of a now defunct FINRA member firm. See Ronay Family Limited Partnership v. Tweed, Cal. App., D062195, 5/23/13. A FINRA rule rendering a claim against a former member ineligible for arbitration… Continue Reading
The United States District Court for the District of Delaware denied a plaintiff’s attempt at a private remedy action for a violation of Securities Exchange Act of 1934 Rule 10b-17. See Gold v. Ford Motor Company, Civil Action No. 10-587-LPS (D.Del.2013). No court has recognized such a private right of action under Rule 10b-17. This Rule… Continue Reading
Former shareholders may pursue narrowed claims against some large private equity firms who allegedly conspired with one another minimizing competition for target companies. See Dahl v. Bain Capital Partners LLC, D. Mass., 07-12388, 3/13/13), http://www.bloomberglaw.com/public/document/Klein_et_a_v_Bain_Capital_Partners_LLC_et_at_Docket_No_107cv1238. The plaintiffs previously held shares in various public companies that were, ultimately, acquired by private equity firms. The complaint alleged… Continue Reading
An allegedly defrauded investor may not compel a broker-dealer to arbitrate claims over his allegedly unsuitable investments. See Berthel Fisher & Co. Financial Services Inc. v. Frandino, D. Ariz., No. DV-12-02165-PHX-NVW, 5/14/13. The investor was not a “customer” of the firm’s registered representative for purposes of the FINRA arbitration code since the registered representative was at… Continue Reading
The Tennessee Supreme Court ruled that it has subject matter jurisdiction to review a trial court’s order vacating an arbitration award while remanding the dispute to a new arbitration panel without expressly declining to confirm the award. See Morgan Keegan & Co., Inc. v. Smythe, Tenn. Sup. Ct., No. W2010-01339-SC-R11-CV, (4/25/13); http://op.bna.com/srlr.nsf/r?Open=jkoo-979qp7. The Court interpreted… Continue Reading