Broker- Dealer Law Corner

On Friday last week, FINRA released a report discussing the findings from its 2018 exams, providing what it described as “selected observations” that were deemed to have “potential significance.” Even with that tepid introduction, in theory, this is still a great idea, since anyone in the industry, even so-called “good” or “clean” firms, should welcome the chance to learn lessons from all those other firms who have managed to find themselves on FINRA’s radar screen.…
If you’ve read this blog for even a short while, you know my feelings on Rule 8210, or, more specifically, how FINRA uses that rule, i.e., as a cudgel to keep member firms and their associated persons in line. Endless 8210 requests for documents and information, sometimes asking multiple times for the same stuff, each one requiring the devotion of significant time, effort and money; this is what haunts broker-dealers these days. This is why…
Last year I wrote about FINRA’s effort to encourage firms to self-report their problems, pausing to wonder at the suggestion attributed to Jessica Hopper, a Senior Vice President with Enforcement, that cooperating with FINRA by self-reporting “not only fulfills a firm’s regulatory responsibilities, but it can also mean the difference between a slap on the wrist and a steep fine, should the infraction elevate to an enforcement case.” Well, last week, LPL Financial got tagged…
I just read an article about a research study conducted of FINRA arbitrations by three people associated with Harvard, Stanford, and the University of Texas, respectively, and their overarching conclusion is a doozy.  Now, admittedly, I have not read the study itself (as it costs $5 to get a copy), so I only know what I read in the article about the study, which I am assuming is correct.  Let me get right to it.…
As I am (probably too) fond of reminding people, I was an English major, and pride myself, at least to some degree, on my ability to use words effectively to communicate clearly. I get easily frustrated, therefore, when I read or hear something that was purportedly designed to relate a specific message, but the message is nevertheless muddled, even if deliberately.  This happens all the time, for example, in politics.  Politicians are notorious for talking…
I recently had to the opportunity to sit in on a talk from high ranking CFTC and SEC enforcement officials at a local bar association meeting. The purpose of the get together was, in part, to let industry folks and their lawyers know what the regulators will be focusing on in the near future in a non-adversarial forum.  In other words, it was a chance to let industry players know what to avoid doing BEFORE…
When a registered rep contacts us about seeking expungement of customer complaints from his or her CRD record, we always respond that expungement is not a sure thing.  It turns out that is more true than ever before because of the way FINRA is treating its “waiver” process. You see, we recently participated in an expungement hearing on behalf of our client, let’s call him AJ.  After the obligatory hearing took place, which was uncontested,…
A little over a year ago, I blogged about a FINRA Enforcement action against an Ameriprise rep – but, notably, not Ameriprise – to highlight what a great job the firm did in ensuring that its sales force was not engaging in any undisclosed outside business activities.  It had a robust supervisory procedure, with multiple levels of review, generating a significant amount of documentation.  Unfortunately, this week, that same firm entered into a $4.5 million
If you are like me, and spend your idle time twiddling around the FINRA website, then you already know that FINRA publishes a variety of mathematical statistics, updated periodically, that provide, along with the sobering tally of the Enforcement actions brought and fines imposed, a good insight into the composition of the membership.  Yesterday, FINRA went one better and released what it called the 2018 FINRA Industry Snapshot, basically, an enhanced version of…
Once upon a time, FINRA at least pretended that it was interested in maintaining a level playing field for claimants and respondents in the arbitrations it administers. Today, all that pretense has been jettisoned.  In Regulatory Notice 18-22, which seeks comments on FINRA’s proposal to require respondents to produce information relating to their insurance policies, FINRA unabashedly concedes that “[t]he benefits of the proposed amendments accrue primarily to claimants in arbitration cases.”  And by…