Posts from January 2018.

A pair of FINRA Rule revisions designed to protect seniors from financial exploitation become effective February 5. The Rules require member firms to request "Trusted Contact Person" information and impose short account-disbursement holds upon reasonable suspicion of financial exploitation.

FINRA Rule 2165 applies to retail accounts held by a "Specified Adult," defined as at least 65 years old, or otherwise impaired and unable to protect her own interests. The Rule allows a 15-day temporary hold on disbursements from an account upon reasonable suspicion of financial ...

Posted in: FINRA

On January 12, the US Supreme Court agreed to review the constitutionality of the SEC's administrative law judges.

On November 29, 2017, the SEC did an abrupt about-face, telling the Court it now regards its ALJs as inferior officers and no longer would defend the lower-court decisions against Lucia. The next day, the SEC itself ratified the appointments of its ALJs. Nevertheless, the Commission argued that the Court should grant cert, appointing an amicus to defend the D.C. Circuit's opinion and considering the "for-cause" removal requirement for current ALJs.

It remains to be seen ...

Posted in: Supreme Court

The Sixth Circuit recently affirmed that failure-to-supervise claims against a brokerage firm over outside business activities it knew nothing about nevertheless were arbitrable under FINRA Rule 12200(2) as "arising in connection with the business activities of the member" firm.

The firm's representative worked together with an outside financial advisor and others to divert a firm customer's assets from an outside bank account to a fraudulent outside business activity. The customers' funds transferred into the brokerage account, out to a bank account and from there to the ...

FINRA recently published its 2018 Annual Regulatory and Examination Priorities Letter, which identifies opportunities for firms to improve their compliance, supervisory and risk management policies or programs. The Letter includes areas that FINRA will focus their efforts on in 2018, and can be a template for upcoming examinations. While certain topics continue to appear on the annual letters, new topics are also included in the 2018 letter. As part of the ongoing initiative, FINRA will continue to provide resources for firms to improve in these areas, including measures to ...

Posted in: FINRA
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