Over the years that I have defended broker-dealers and investment advisors, a more robust overview of outside business activity (OBA) disclosures would have gone a long way to disprove a number of claims. So where did these firms go wrong?
The biggest issue that I have seen is a firm’s willingness to take the OBA
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?
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
A divided Securities and Exchange Commission adopted new rules to strengthen oversight of broker-dealers’ custody of customer assets.
The regulations amend the SEC’s broker-dealer reporting rule Securities and Exchange Act of 1934 Rule 17a-5, requiring firms to file new quarterly reports — Form Custody — containing information as to if and how they maintain custody
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
Regulators seem to believe that lawyers and their law firms act like ostriches when it comes to their clients and Ponzi schemes. For example, a law firm paid $25 million to settle malpractice claims over legal services rendered to certain hedge funds and related entities controlled by a Ponzi Scheme artist, Arthur Nadel. See SEC
The receiver for a convicted fraudster and his entities will not be able to recover a $2 million donation the fraudster made to a small Minnesota college. See Kelley v. College of St. Benedict, D. Minn., Civ.;’ No. 12-822 (RHK/LIB), 10/26/12, and http://docs.justia.com/cases/federal/district-courts/minnesota/mndce/0:2012cv00822/125281/34/.
The federal district court found that the receiver lacked the ability to bring this
Okay, no one is suggesting that you start a Ponzi scheme!!! However, now, that we have your attention, you should be aware of the United States Court of Appeals for the Second Circuit’s decision affirming a 25-year prison sentence for Ponzi scheme operator, Nicholas Cosmo. See United States v. Cosmo, 2d Cir., No. 11-4506, 9/20/12, and
The SEC has decided to appeal a district court decision denying the SEC’s application to force SIPC to pay Staford investors. See SEC v. SIPC, D.D.C., No. 1:11-mc-00678-RLW, 8/31/12, and http://www.scribd.com/doc/81297680/Judge-Wilkins-Opinion-re-SEC-SIPC-Case.
The SEC believes that these investors should be protected by SIPC insurance. However, the court’s decision held that the investors did not
The United States Supreme Court refused to review a federal appeals court ruling approving a $62 million award against a former hedge fund manager, who defrauded hedge fund investors over several years. See Lauer v. SEC., U.S., No. 12-260, 10/29/12, and http://www.supremecourt.gov/orders/courtorders/102912zor_3f14.pdf.
This was an appeal from the United States Court of Appeals for the