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

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

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

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.

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

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