FINRA reported that, for 2015, Claimants won about half of private securities arbitrations: 47% for all-public panel decisions; 45% for majority-public panels. A colleague and securities mediator, Dana Pescosolido, recently studied FINRA's 2015 private securities arbitrations to see just what the results are when Claimants "win." The study can illuminate mediation (and other risk-assessment) expectations. FINRA Securities Arbitrations Of the 3,435 securities arbitrations filed in 2015, 2,341 (68%) were customer cases and 1,094 (32%) were intra-industry disputes ...
The SEC's Office of Compliance Inspections and Examinations ("OCIE") announced the agency's priorities for this year on January 11. Commission staff will focus on three broad areas: Retail Investors, Market-Wide Risks, and increased used of Data Analytics. Retail Investors Seniors top the list in this category, as the SEC continues its "ReTIRE" initiative announced last June. A nod to the aging boomer bubble, the ReTIRE program is a multi-year effort focusing on investment-adviser and broker-dealer issues in the retirement savings context, including: reasonable-basis ...
FINRA released its annual Regulatory and Examination Priorities Letter (so-called "Errico Letter") on January 5. FINRA's top five priorities:
- Firm Culture. FINRA's been pushing "culture of compliance" for years, but in 2016 will take it to the next level: "FINRA will formalize our assessment of firm culture while continuing our focus on conflicts of interest and ethics." In looking at a firm's culture, FINRA will focus on "Five Factors" to assess whether:
- policy or control breaches are tolerated;
- control functions are valued within the organization;
- managers are ...
As 2015 ended, FINRA fined Barclays Capital $13.75 million for mutual-fund switching and breakpoint supervisory failures that might have been avoided if that part of Barclay's WSPs had been properly calibrated and/or part of their annual compliance testing. The lapses stemmed in part from an inaccurate definition of switching in Barclay's WSPs and those undetected problems mounted over the years. A five-year look back review uncovered over 6100 unsuitable switches with customer harm of about $8.63 million; a similar six-month look back revealed 1,723 unsuitable mutual-fund ...
On Christmas Eve's eve, the SEC approved, without change, the MSRB's proposed conduct rule for municipal advisors. Broadly, the Rule imposes:
- Fiduciary duty (care and loyalty) to municipal entity clients but only a duty of care to obligated persons;
- Written engagement-letter and conflict-disclosure regime;
- Suitability and KYC requirements;
- A list of prohibited practices, including a wide-ranging (but not absolute) ban on principal transactions with municipal entity clients.
New Rule G-42 has been in the works since January, 2014 and the MSRB filed two amendments with the SEC ...
FINRA's Dispute Resolution Task Force issued its Final Report in mid-December. The Report reflects the group's consideration of wide-ranging issues affecting the nation's principle dispute-resolution forum for broker-dealers, their associated persons and customers. The Task Force made 51 recommendations for changes to FINRA Arbitrations, including: Improve Arbitrator Quality by:
- Increasing compensation;
- Improving recruitment for depth and diversity;
- Improving selection to provide a pool of 30 in all-public arbitrator cases; achieve earlier and better conflict ...