Posts from February 2020.

FINRA held its bi-annual Cybersecurity Conference in January and recently published five take-away real-world experiences from the conference:

  • A firm’s social media posts about a charity golf tournament, tipped the scammers when to send an urgent email changing wire instructions, while most of the firm’s management was out on the course;
  • A thumb-drive planted in a parking lot labeled “bonuses,” “payroll,” or “commissions” proved bait too tasty for a firm’s personnel to resist;
  • Even the best vendor-based data systems have hidden vulnerabilities lurking ...
Posted in: Cyber Security, FINRA

FINRA issued a targeted-exam letter on February 20, 2020 seeking information on the effect of zero-commission trading upon compliance with related obligations of Best Execution, payment for order flow, and non-commission account fees.  The Exam Letter is here.

The zero-commission tide rose quickly throughout 2019, together with some industry consolidation as well.  Among those announcing no commissions:

  • Ally Invest, the investment affiliate of online Ally Bank;
  • E-Trade, to be acquired by Morgan Stanley, announced February 20, here.
  • Fidelity
  • Interactive Brokers
  • Robinhood
Posted in: FINRA

Financial institutions should understand that relying on a power of attorney may subject them to potential liability as the use of powers of attorney becomes more commonplace.  The Alabama Supreme Court recently shed some light on this topic in Forbes v. Platinum Mortgage, Inc., No. 1180985, 2020 WL 746533 (Feb. 14, 2020).

In Forbes, Platinum Mortgage and PennyMac Loan Services LLC relied on a power of attorney when executing a $175,000 mortgage.  The principal's conservator later claimed that the principal lacked the capacity to execute the power of attorney and initiated the ...

Firms permitting the creation and operation of custodial accounts related to Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) transactions must take special notice of Financial Industry Regulatory Authority's (FINRA) recent Regulatory Notice 11-02.  This notice requires firms to take steps to establish the identity and age of the custodians and beneficiaries of custodial accounts.  Such custodial accounts are tied to UTMA and UGMA transactions allowing individuals to transfer property to a minor without the need for a formal trust.

While some ...

Posted in: FINRA
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