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

FINRA has released for comment its proposed amendment to Rule 8312, otherwise known as the BrokerCheck Disclosure rule. As it currently stands, FINRA waits for 15 days before it releases information reported on Form U5. This delay was meant to give a registered representative adequate time to comment.

FINRA has proposed to change the waiting

In a recent Acceptance, Waiver and Consent (“AWC”) a broker dealer was censured and fined for, among other things, the failure to conduct an adequate pre-hire investigation of a registered representative. The importance of this AWC is that it may signal FINRA’s mindset for what firms must do under Rule 3110(e).

Under Rule 3110(e), FINRA

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

Starting July 1, member firms are required to have written procedures to verify the accuracy and completeness of the information in a registered representative’s U-4 within 30 days of the U-4 being filed with FINRA.  The question that arises is whether the expense of this new type of “investigation” is worth it.pointing.jpg

In short, member

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

FINRA recently put into place the highly publicized prohibition of making a settlement contingent upon a registered representative having the subject arbitration expunged from the representatives U-4.  Is this a good thing? 

The claimants’ bar thinks this is a good thing because it will prevent bad apples from having their records cleaned.  This position seems

A senator wrote to FINRAand the SEC raising concerns about the high rate that broker-dealers have complaints expunged from their records.  See http://www.markey.senate.gove/documents/2013-10-25_FINRA.pdf; http://www.markey.senate.gove/documents/2013-10-25_SEC.pdf.

In the letter to FINRA, the senator said the high expungement rate means that BrokerCheck is not providing investors with accurate information, and “rogue brokers” continue to operate their