Posts in FINRA.

On July 27, 2022, FINRA filed a proposed rule change with the SEC that would “modernize” its supervision rule to make permanent pandemic-related temporary exemptions that allowed limited-scope work-from-home (“WFH”) for brokers.

The filing proposes “to adopt new Supplementary Material .19 (Residential Supervisory Location) under FINRA Rule 3110 (Supervision) that would align FINRA’s definition of an office of supervisory jurisdiction (“OSJ”) and the classification of a location that supervises activities at non-branch locations with the existing ...

Posted in: FINRA, SEC

On June 29, 2022, FINRA released the report of its independent investigation, concluding that allegations of a “secret agreement” to avoid certain arbitrators on an industry lawyer’s cases were untrue.

The allegations were the basis for a Georgia state court’s January 2022, vacatur of an award in favor of a large bank’s brokerage unit. The ruling is pending appeal.  Based on the Georgia court’s finding that the Respondents had “manipulated the arbitration process,” FINRA’s Audit Committee commissioned an independent review. The review was led by a Lowenstein ...

Posted in: Arbitration, FINRA

In its April 27 Weekly Update, the Financial Industry Regulatory Authority’s (“FINRA”) National Cause and Financial Crimes Detection program urged FINRA member firms to review a cyber-threat alert arising from Russia’s invasion of Ukraine.

The Cybersecurity and Infrastructure Security Administration (“CISA”) issued an April 20, 2022, Advisory warning of increased Russian state-sponsored and criminal cyber threats in retaliation for Western support for resistance to Russia’s invasion of Ukraine. The cybersecurity authorities of Australia, Canada, New ...

In the securities industry, regulators like to say that the compliance professionals are their “partners.” But every so often, those regulators charge one of their compliance partners with rule violations. The compliance community understandably gets unsettled, expresses concern, and regulators respond with a “don’t worry” clarification explaining those charges were driven by unusual “facts and circumstances.” That cycle just completed again.

On March 17, the Financial Institution Regulatory Authority (“FINRA”) issued Regulatory Notice 22-10 to ...

Posted in: FINRA

The regular “Weekly Update” email from the Financial Industry Regulatory Authority (“FINRA”) had an eye-catching warning February 16, urging broker-dealer member firms to heed the “Shields Up” cyber threat warning from the Cybersecurity and Infrastructure Security Agency (“CISA”) and the FBI.

That warning urged heightened cybersecurity vigilance “related to Russia’s potential destabilizing activities against Ukraine.” The CISA alert said, “While there are not currently any specific credible threats to the U.S. homeland, we are mindful of the ...

Over the last couple of decades, the securities self-regulatory organization FINRA (f/k/a NASD) informs its membership each year of what compliance risks are noted by its examination program. Those are risks firms should address and also might be harbingers of enforcement focus for the coming year. Years ago, it was the “Errico Letter” - a friendly reminder from NASD’s Head of Member Regulation. Then it became the Examination Priorities Letter. Now it’s a Report, but with a more useful assemblage of the Rules and Resources applicable to each risk called out.

Some risks have ...

Posted in: Cyber Security, FINRA

The Financial Industry Regulatory Authority (“FINRA”) recently kicked off a “sweep” examination with its August 2021 Targeted Exam Letter on “practices and controls related to the opening of options accounts and related areas, including account supervision, communications and diligence.”  The exam covers both self-directed and rep-recommended retail accounts (not institutional or managed accounts) during January 1, 2020 through the present.

The sweep seeks:

  1. “Written Supervisory Procedures (WSP), compliance manuals and any other written guidance ...
Posted in: FINRA

On August 13, 2021, the Financial Industry Regulatory Authority (“FINRA”) issued Regulatory Notice 21-29, collecting guidance on outsourcing and vendor management.  The Notice was prompted by increased reliance on outsourcing (especially during COVID), some enforcement actions involving vendor-management issues, and similar proposed inter-agency guidance by banking regulators.

The Notice reminds firms that while they can outsource task or functions, they cannot outsource-away their regulatory compliance obligations.  In turn, that means the outsourcing process ...

Posted in: FINRA

Last week, FINRA issued Regulatory Notice 21-16 cautioning member firms against attempting to limit customer claims through language in mandatory pre-dispute arbitration agreements. Rule 2628 prescribes disclosure requirements for arbitration clauses and generally prohibits provisions that contradict other FINRA Rules.

The Notice specifically cautions against several provisions that improperly limit customer claims:

First, firms cannot specify hearing locations, because FINRA Rule 12213 provides the Arbitration Director will. FINRA usually schedules hearings ...

Posted in: FINRA

In an SEC filing, Friday, February 26, Robinhood Financial and Robinhood Securities disclosed they are negotiating with FINRA, the SEC, and state regulators, attempting to settle investigations into options-trading and outages from March 2020.

The investigations focus on Robinhood’s options-trading approval processes and how the app displays cash and buying power to customers.  Similar issues were involved in the GameStop (“GME”) imbroglio earlier this year.  Congress and various regulators continue to examine the GME situation.

The Companies disclosed they have ...

Posted in: FINRA, SEC

The Wall Street Journal reports traders on Reddit’s WallStreetBets forum – the same social medium that helped fuel the GameStop short squeeze – have started bidding up cannabis stocks.  Mentions on the forum jumping from near zero to over 8,000 in just a few days.  WallStreetBets Traders Set Cannabis Stocks Alight (Wall St. J., Feb. 11, 2021), is here.

Perhaps not coincidentally, the day before, FINRA issued a Special Alert reminding firms of their regulatory obligations regarding low-priced, often volatile, stocks.  The Alert is to

“help FINRA member firms that engage in ...

Posted in: FINRA

During the height of the GameStop (NYSE: GME) mania, Slate author Jordan Weissman explained that

“[A]t a moment that the markets are being overrun, for better or worse, by posters who’ve basically dedicated themselves to shredding the idea that markets are efficient, rational mechanisms for allocating capital and discovering value, tweeting about stonks seems far more appropriate than discussing something as reasonable and comprehensible as stocks. It’s an emotional onomatopoeia for talking about people throwing their money at the market when, lol, nothing ...

Posted in: FINRA

On Thursday, January 28, trading-app broker-dealer Robinhood – a self-styled disrupter democratizing trading – suspended its users’ ability to buy Gamestop stock or options (along with other stocks).  After playing a prominent role in the crowd-sourced short-squeeze on the meme stock, abruptly shutting the “buy” door prompted swift and fierce reactions.  NY Rep. Alexandria Ocasio Cortez tweeted that Robinhood’s freeze on Gamestop buys was “unacceptable” and called for Congressional hearings. Texas Sen. Ted Cruz quickly agreed (eliciting a snarky ...

Posted in: FINRA

On February 1, 2021, the Financial Industry Regulatory Authority (“FINRA”) released its “Report on FINRA’s Risk Monitoring and Examination Activities.”  The Report combines two of FINRA’s long-standing reports:  (a) the retrospective Report of Examination Findings from the prior year; with (b) its forward-looking Examination Priorities Letter.

The new format is more user-friendly for supervision and compliance professionals than the prior reports, setting out for each topic:

  • Regulatory Obligation with citation to relevant rules;
  • Related Considerations
Posted in: FINRA

On May 28, 2020, FINRA issued its Regulatory Notice 20-16 sharing firms’ WFH practices observed to date.  They include common practices adopted across most industries, as one would expect.

During the TRANSITION TO WFH, firm practices included:

  • Increased Customer Assistance through outreach and web-based communications, to ensure customers knew how to access representatives and other resources;
  • Location Monitoring & Contact Lists to know where staff were and ensure they knew how to stay in touch;
  • Increased Support for staff, including more frequent training and ...
Posted in: FINRA

The dispute-resolution arm of broker-dealer regulator FINRA has canceled all in-person arbitration hearings and mediation sessions through July 3, 2020.  In-person hearings originally were canceled through May 1, then extended through May 31.  The update also indicates that FINRA will waive postponement fees on stipulated postponements from July 6 through September 4.  FINRA will provide Zoom or telephonic hearings in matters where the parties agree or the Panel orders it.  FINRA staff will be notifying parties and counsel in individual matters and to discuss rescheduling ...

Posted in: FINRA

On April 9, FINRA amended its customer arbitration rules to give customers more options when a Respondent firm or associated person becomes “inactive” during an arbitration.

The largest percentage of unpaid customer awards in FINRA arbitrations are those against Respondent firms or associated persons who are “inactive” – that is, whose FINRA membership has been terminated, suspended, canceled, or revoked.  Those “inactive” Respondents are out of the business – and often just out of business, period.

FINRA Rule 12202 requires a customer Claimant to ratify, by ...

Posted in: FINRA

This week FINRA issued Reg. Notice 20-08 on “Pandemic-Related Business Continuity Planning, Guidance and Regulatory Relief.”

FINRA urges member firms to review and update their Business Continuity Plans (“BCP”) to ensure they fit the effect of an infectious disease pandemic on each firm’s operations and risk profile.  See Rule 4370 (annual BCP review requires an update on any material change).

FINRA anticipates that firms may need to implement remote work arrangements (whether telecommuting or working from firm alternate or recovery sites).  In those instances ...

Posted in: FINRA

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

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

On September 11, FINRA announced its filing of an enforcement action accusing a Massachusetts broker of fraud and registration violations arising from his sale of an unregistered cryptocurrency, "HempCoin." It is FINRA's first cryptocurrency enforcement action.

FINRA alleges Timothy Ayre of fraudulently attempting to bolster his worthless public shell company, Rocky Mountain Ayre, Inc. (RMTN in the OTC pink sheets). Ayre alleged repackaged HempCoin as a security backed by RMTN common stock, marketing it as "the world's first currency to represent equity ownership" in a ...

Posted in: Cryptocurrency, FINRA

FINRA recently proposed to remove the broker's "control" of a securities account as a required element of a "quantitative suitability" violation under Rule 2111.

For many decades, case law on broker-dealer fraudulent practices under Rule 10b-5 and others recognized a cause of action for "churning:" Knowingly recommending an unsuitable volume or frequency of trading in an account, by a broker exercising actual or constructive control over that account, as a form of self-dealing to generate commission revenue at the customer's expense.

When FINRA revised its "suitability" rule ...

FINRA has proposed a new $100 per-arbitrator fee and a $100 per-arbitrator honorarium for the late cancellation or continuation of prehearing conferences in FINRA arbitrations. The proposed rule change would affect both customer cases and industry cases, and FINRA is seeking to amend FINRA Rules 12214(a), 12500, 12501, 13214(a), 13500, and 13501. In essence, if one or more of the arbitrating parties cancels or obtains a continuance of a prehearing conference within three business days of the scheduled hearing (for example, an Initial Prehearing Conference or "IPHC"), the ...

Posted in: Arbitration, FINRA

FINRA currently requires registered representatives to inform their broker-dealer of any proposed outside business activities that they may be engaging in so that the firms can determine whether to permit the representative to proceed with the activities. This requirement has a far reaching impact, which includes compliance concerns, reporting requirements, and investor protection protocols.

The proposed rule seeks to clarify the obligations and further strengthen investor protection. It would require representative's to provide "prior written notice for all ...

Posted in: FINRA

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

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

On February 5, 2018, FINRA will enact two rules to assist brokers with addressing financial exploitation of the elderly. Statistically, the elderly have a 1 in 20 chance of being a victim of financial exploitation. [Financial Exploitation of Older Adults: A Population-Based Prevalence Study, Journal of General Internal Medicine (2015)]. As financial abuse, especially of the elderly, continues to be a concern, the SEC approved FINRA's request to amend FINRA rule 4512 ("Customer Account Information"), found here, and approved new rule 2165 ("Financial Exploitation of Specified ...

Posted in: FINRA

Effective April 3, 2017, all FINRA arbitration participants (except pro se parties) must use FINRA's web-based DR-Portal to file and serve documents in both customer and industry arbitrations.

Pro se parties may elect to use the Portal or opt-out, using traditional filing and service methods instead.

Exceptions to Portal service include most items involving new or non-parties, documents produced and permanent injunction claims:

  • pro se customers who do not elect to use the Party Portal;
  • documents produced in response to discovery requests or pursuant to the Discovery Guide;
Posted in: Arbitration, FINRA

On January 4, new President and CEO Richard Cook issued FINRA's Annual Regulatory and Examination Priorities Letter. This year's list in summary is:

New for 2017:

Targeted electronic off-site reviews "on select firms not scheduled for cycle exams."
An annual summary report of key exam findings on selected issues
More resources for small firms, including:
- Compliance calendar;
- Compliance service provide directory.

High-Risk / Recidivist Brokers

Dedicated exam group
Supervisory procedures and due-diligence
Branch inspections

Sales Practices

Seniors: fraud and abuse; ...

Posted in: FINRA

In late October, FINRA issued a sweep exam, commanding firms to produce 15 categories of documents about firm's cross-selling programs over a 5-year span. The sweep seeks information on cross-selling, including incentives and compensation, tracking and performance metrics, complaints and discipline, compliance and supervision, among others. The letter also imposes a November 15 response deadline.

The sweep letter does not expressly refer to the recent Wells Fargo cross-selling scandal or to Senator Warren's ensuing broad-side calling for SEC Chair White's resignation ...

Posted in: FINRA

The SEC announced August 25 that it approved FINRA's pay-to-play rules governing placement-agent or solicitor broker-dealers and was "prepared" to approve the extension of MSRB Rule G-37 to municipal advisors as well.

The two rule proposals would complete the pay-to-play suite of rules across municipal securities dealers, investment advisors, broker-dealers, and municipal advisors. The bedrock Rule - MSRB's Rule G-37 governing municipal finance professionals and dealers - has been in place since 1994. After Dodd-Frank's expansion of municipal-advisory regulation, the ...

Posted in: FINRA, MSRB, SEC

In a July 22 Notice, FINRA took umbrage at a growing line of Court decisions suggesting that a later or more-specific forum selection clause in an agreement between the parties may override a prior customer arbitration agreement. FINRA defended it arbitral forum, pointing out that members are subject to discipline for restricting a customer's right (or even request) to arbitrate.

An expanding line of precedent holds that a later forum-selection provision (limiting disputes to a particular court) may supersede a prior arbitration provision between the same two parties. See, e.g ...

Posted in: Arbitration, FINRA

For years, self-regulatory agencies (like FINRA or the Exchanges) have wielded the statutory authority granted them by Congress - and backed by the SEC - exercising governmental power to compel testimony, impose fines and punishments, and even bar a person or firm from an entire industry.

At the same time, they declaim that they're just membership organizations, so don't owe anyone Constitutional protections (like Fifth Amendment Due Process) and aren't subject to Equal Access to Justice Act claims for your litigation expenses when they lose.

So SROs essentially are the ...

In a recent new release, the Tennessee Securities Division urged investors to ask tough questions of their investment advisors, and about their compensation, account arrangements and educational / regulatory history.

The May 26 release is here.

SEC-registered investment advisors are required to provide the answers to those (and other) questions on their ADV Part 2, which is kept on file with the SEC and publicly-available through the Commission's IA Public Disclosure Portal, here. Information on registered broker-dealers and their associated persons is available through ...

Posted in: FINRA, SEC, Tennessee
The SEC has approved FINRA Rule 2273, which requires a transferring representative to send customers an educational communication regarding firm recruitment practices and account transfers. The rule is designed to address situations in which a representative leaves his or her firm and contacts former customers. Noting that "the former customer's confidence in and prior experience with the representative may be one of the customer's most important considerations in determining whether to transfer assets to the recruiting firm," FINRA was concerned that former customers have ...
Posted in: FINRA, SEC

Richard Ketchum, the retiring CEO of FINRA, said that the regulator intends to expand the reporting available through its BrokerCheck ® web tool to include relative concentrations of disciplined brokers in industry firms.

Some studies have found that brokers terminated for misconduct often are hired by firms having a higher incidence of their own misconduct. "There are firms that hire from the predatory firms that go out of business. That is your biggest risk," said Ketchum. Ketchum also said that FINRA is considering making its underlying BrokerCheck data available for bulk ...

Posted in: FINRA

An article in this weekend's Wall Street Journal called for FINRA to make the database underlying its BrokerCheck ® system (of reports on stockbroker registration and disciplinary history) more widely available for data mining and analysis by public-sector participants.

The article roundly criticized FINRA's interface that limits public access to peep-show, one-broker-at-a-time reports: "In the age of Big Data, it is time to liberate the BrokerCheck files. Only when information is set free can it turn into insight." J. Zweig, "Is Your Stockbroker Great or Mediocre?" Wall ...

Posted in: FINRA, MSRB

It is not uncommon for registered representatives to change broker-dealers over the course of their career.

In most cases, their customers will typically switch firms as well, as they follow their representative to wherever he or she may go. Seems like a non-issue, right? FINRA did not think so. FINRA became concerned that when the representatives contacted the customers to discuss the switch, the customers may not be provided all the information necessary to make an informed decision on whether to transfer their assets. Accordingly, FINRA proposed a rule that requires ...

Posted in: FINRA, SEC

The Fifth Circuit Bar Association's summary reports: "Appellants were investors who suffered financial losses as a result of R. Allen Stanford's Ponzi scheme. In their arbitration complaint, they sought $80 million in damages. After a two week hearing, a Financial Industry Regulatory Authority panel rejected Appellants' claims, but it awarded them $10,000 in compensation for certain arbitration-related expenses. "On November 7, 2014, Appellee filed, pursuant to Section 9 of the Federal Arbitration Act, a motion to confirm the arbitration award. Because the arbitration ...

Posted in: FINRA
Each year, FINRA and the SEC publish their priority letters explaining areas of focus for the upcoming year. The priorities reflect practices and/or products that are perceived to present either heightened risk to investors, a risk to the integrity of the U.S. capital markets, or are otherwise areas of potential concern inherent in the securities industry. One area that FINRA will be focusing on is incentive structures and conflicts of interest that may arise with registered representatives selling proprietary or affiliated products, or products for which the firm receives ...
Posted in: FINRA, SEC

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 ...

Posted in: Arbitration, FINRA

FINRA released its annual Regulatory and Examination Priorities Letter (so-called "Errico Letter") on January 5. FINRA's top five priorities:

  1. 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 ...
Posted in: FINRA

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 ...

Posted in: FINRA

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 ...
Posted in: Arbitration, FINRA
On December 16, FINRA submitted for SEC approval proposed Rule 2273 to require that brokers send customers an "educational disclosure" when changing firms. Although the proposal deletes a controversial provision that would have required disclosure of hiring bonuses, it requires hiring firms to deliver the FINRA-prescribed disclosure form when contacting former customers about account transfers or receiving their transferred funds. The Rule would require the communication to accompany mailings, be hyper-linked in emails, or sent within three business days after phone ...
Posted in: FINRA, SEC
This week FINRA proposed for SEC adoption a "pay-to-play" rule for broker-dealers engaged in distribution or solicitation activities with government entities. The Proposed Rule is modeled after investment-adviser pay-to-play Rule 206(4)-5 under the '40 Act, adopted by the SEC in 2010. Proposed FINRA Rule 2030(a) would prohibit a covered member from engaging in distribution or solicitation activities for compensation with a government entity on behalf of an investment adviser that provides or is seeking to provide investment advisory services to such government entity ...
Posted in: FINRA, SEC

Last week, VW blamed its "culture" for allowing "individual misconduct" that lead to the emissions-testing-evasion scandal engulfing the company. It reminded me of a couple of corporate-compliance mantras and of DOJ's recent Yates Memo: To deter individual misconduct, you need a "Culture of Compliance" set by "Tone from the Top." Volkswagen's mea culpa bears that out: VW admitted it had neither and blamed both. See "VW Says 'Culture' Flaw Led to Crisis," Wall St. J. at B1 (Dec. 11, 2015) For years - decades, in fact - the United States Department of Justice and securities ...

Posted in: FINRA, SEC
The Securities and Exchange Commission recently approved a rule change to amend FINRA Rule 2210 to require broker-dealers to include a "readily apparent reference and hyperlink" to BrokerCheck on their websites. The hyperlinks and references to BrokerCheck would be required for all webpages where a registered person's profile information appears, including webpages on the member's website and webpages on a branch office's website. This is an important development because BrokerCheck is a site for investors to conduct due diligence on broker and broker-dealers. Two FINRA ...
Posted in: FINRA, SEC
The SEC recently approved the Municipal Securities Rulemaking Board's ("MSRB") extension to Municipal Advisors ("MA's") of its dealer Rule G-20, restricting gifts in connection with municipal securities. The Rule also updates and consolidates existing guidance and conforms to FINRA's similar requirements in FINRA Rule 3220. The Rule adds a new prohibition against entertainment-expense reimbursement from offering proceeds, Rule G-20(e). In general, the Rule prohibits gifts or services (including gratuities) exceeding $100 per year to any person if they relate to the ...
Posted in: FINRA, MSRB, SEC
FINRA Reg. Notice 15-37 (Oct. 2015) requests prompt comment (by November 30) on proposed Rules aimed at detecting and minimizing financial exploitation of seniors and other "vulnerable" adults. The proposals would amend Rule 4512(F) to require Firms' reasonable efforts to obtain name and contact information for a "Trusted Contact" person for newly-opened (or updated) individual accounts. A "Trusted Contact" must be over 18 and not authorized to transact business on the account. With notice to the account holder, Firms would be authorized to notify a "Trusted Contact" ...
Posted in: FINRA
A little over one year ago, the Financial Industry Regulatory Authority (FINRA) announced a proposal to increase substantially its collection of brokerage data. That proposal, named the Comprehensive Automated Risk Data System (CARDS), sought to take advantage of "technological advances [that] c[ould have] be[en] leveraged to obtain, store, manage and access large quantities of data to identify and quickly respond to potentially fraudulent and abusive behavior." Almost immediately upon its announcement of the proposal, FINRA faced industry-wide backlash centered ...
Posted in: FINRA
In a September 2 Alert, FINRA warns that scammers are using messaging app spam-casts to impersonate brokers and tout micro-cap stocks to "pump" their prices, before "dumping" their positions at the top and leaving investors holding the bag. Fraudsters merely are taking advantage of newer cross-platform messaging apps (like WhatsApp) that avoid SMS charges, thus making their spam-casts easier. In a pump-and-dump scheme, the scammers take a big position, typically in a thinly-traded penny (or "microcap") stock. Then they tout the stock urgently - often on pretended inside ...
Posted in: FINRA
On August 24, 2015, FINRA Rule 2040 concerning payments to unregistered persons went into effect. The rule, approved by the SEC in January 2015, is aligned with § 15(a) of the Securities Exchange Act of 1934. Generally, FINRA firms or associated persons are forbidden from "paying any compensation, fees, concessions, discounts, commissions or other allowances" to persons not registered as broker-dealers under § 15(a) but who are required to be registered (as a result of receiving such compensation) or appropriately-registered association persons outside of compliance with ...
Posted in: FINRA, SEC

FINRA this week released its targeted exam letter requesting information on firms' conflict-of-interest policies surrounding broker compensation and retail accounts. The sweep follows up on FINRA's Conflicts Report from October 2013, which recommended changes to firm supervision and oversight of conflicts of interest. The letter requests extensive categories of information covering retail accounts during the period from August 2014 through July 2015. FINRA seeks information about firm policies and procedures to:

  • Identify and manage conflicts;
  • Surveillance of ...
Posted in: FINRA
The Financial Institutions Regulatory Authority fined a UBS unit $750,000 for mistakenly reporting customers' municipal-bond-account interest was tax-exempt, when the firm's handling of the trades made it taxable instead. Because the brokerage itself paid over 4000 customers about $1.2 million in interest, the payments weren't tax exempt; to qualify, the interest must be paid directly by a municipal issuer. Instead, the firm had used the customers' long positions in those bonds to cover the firm's short positions and so made substitute interest payments. FINRA's AWC stated ...
Posted in: FINRA
FINRA issued its late-July Regulatory Notice 15-27 warning brokerage firms that inadvertent short positions or fail-to-delivers in municipal securities trading can create situations where the member-firm pays a customer substitute interest that is not tax-deductible. Firms need to ensure their supervisory and compliance systems, and just as importantly their customer communications, address those situations. Short sales of municipal securities (selling a borrowed position, and buying it in lower, later) are rare. But the IRS has held that the lender's receipt of interest ...
Posted in: FINRA
The Financial Industry Regulatory Authority (FINRA) announced last week that it is seeking comment on a proposal to create a new academic Trade Reporting and Compliance Engine (TRACE) data set. While academic researchers already use historic TRACE data, the data currently available to researchers does not include identifying information about dealer identities. The new data product, which would be available solely to institutions of higher education, would include masked dealer identities. FINRA's proposal, which is similar to a proposal recently made by the Municipal ...
Posted in: FINRA, MSRB
The Financial Industry Regulatory Authority ("FINRA") recently filed a proposed rule change with the Securities and Exchange Commission ("SEC") to amend Rules 12214 and 12601 of the Code of Arbitration for Customer Disputes ("Customer Code") and Rules 13214 and 13601 of the Code of Arbitration Procedure for Industry Disputes ("Industry Code") (collectively, "Codes") to require that parties to an arbitration to provide more advance notice before cancelling or postponing a hearing or pay a higher cancellation fee if advance notice is not provided. These changes are ...
The Department of Labor ("DOL") released a controversial proposed rule on April 20, 2015, that seeks to expand fiduciary duties in the context of retirement-investment advice. Specifically, the proposed rule would rework a 1975 five-part test that greatly limits the fiduciary responsibilities of advisors for plans covered under the Employment Retirement Income Security Act ("ERISA"). The new fiduciary-duties standard proffered by the rule would require advisors to put the best interests of the client ahead of any profit motive, especially the incentives inherent to certain ...
Posted in: FINRA, SEC, SIFMA

The Financial Industry Regulatory Authority's disciplinary appellate body (the National Adjudicatory Council or NAC) has revised the Sanction Guidelines used to determine penalties in enforcement cases. The revisions increase the severity of some Guidelines and generally index monetary fines to the Consumer Price Index. Key among the changes, the NAC:

  • Urges "strong consideration" of individual bars or firm expulsion for intentional fraud or cases in which aggravating circumstances predominate
  • Emphasizes more severe sanctions for recidivists;
  • Increases the upper ...
Posted in: FINRA
FINRA recently issued Regulatory Notice 15-06 requesting comments on the proposal that would require the registration of associated persons involved in the design, development or modification of algorithmic trading strategies. As automation continues to evolve, firms are relying more on automated systems to trade securities. With the use of pre-programmed trading instructions, or algorithmic trading strategies, firms can input various variables in order to achieve the required trading activity. If an individual, as opposed to an automated system, performed the trade ...
Posted in: FINRA
The Securities and Exchange Commission announced on March 25, 2015 a proposal to amend Rule 15b9-1 under the Exchange Act to require broker-dealers who trade in off-exchange venues to become members of a national securities association. According to the SEC's press release, "the amendments would enhance regulatory oversight of active proprietary trading firms, such as high frequency traders." Under this proposal, such broker-dealers would be regulated not only by the SEC, but also the industry's self-regulatory agency, the Financial Industry Regulatory Authority ...
Posted in: FINRA, SEC
After seeking comments last fall, the Securities and Exchange Commission ("SEC") recently approved the Financial Industry Regulatory Authority's ("FINRA") proposed rule governing member firms' verification and investigation of associated persons applying for registration with a member firm. Specifically, the Rule, which is based largely on NASD Rule 3010(e), requires member firms to investigate the qualifications and experience of its applicants as well as adopt written procedures designed to verify the accuracy of the disclosures contained in an applicant's ...
Posted in: FINRA, SEC

The Financial Industry Regulatory Authority ("FINRA") recently issued an Investor Alert (the "Alert") to warn investors about the most prevalent types of investment fraud and provide guidance on how to avoid being defrauded. According to the Alert, the five (5) most common fraudulent investment schemes tend to fall into the following general categories:

Pyramid Scheme: A fraudulent ploy in which a small investment is promised to yield large profits within a short period in time, but, in reality, investors only make money if they successfully recruit new investors into the ...

Posted in: FINRA
On February 26, 2015, the Securities and Exchange Commission ("SEC") approved a rule proposed by the Financial Industry Regulatory Authority, Inc. ("FINRA"). The rule, originally proposed by FINRA on June 17, 2014, amends FINRA Rule 12100(p) of the Code of Arbitration Procedure for Customer Disputes and FINRA Rule 13100(p) of the Code of Arbitration Procedure for Industry Disputes defining the term "non-public arbitrator" and FINRA Rule 12100(u) of the Customer Code and FINRA Rule 13100(u) of the Industry Code defining the term "public arbitrator." The proposed rule change was ...
Posted in: FINRA, SEC

The Wall Street Journal reported Thursday that the SEC is in the midst of a sweep to crack down on companies' use of NDAs or employment agreements that might impede whistleblower reporting in violation of Dodd-Frank amendments. Wall St. J. at C1 (Feb. 26, 2015). We reported last November on a letter from eight House Democrats asking the SEC to examine the issue, here. SEC Chair White's January 5 response is here. SEC Rules prohibit using agreements to restrict or prevent whistleblower reporting. 17 C.F.R. § 240.21F-17(a). And the SEC's broadened administrative jurisdiction now gives ...

Posted in: Dodd-Frank, FINRA, SEC

FINRA Dispute Resolution filed with the SEC a proposed change to Code of Arbitration Rules 12214 and 12601 (and industry Rules 13214 and 13601) to increase late cancellation fees from $100 to $600 per arbitrator and expand the notice period for late hearing cancellations from 3 to 10 days. See SR-FINRA 2015-003 (filed SEC Feb. 5, 2015). Thomas K. Potter, III (tpotter@burr.com) is a partner in the Securities Litigation Practice Group at Burr & Forman, LLP. Managing Partner of the Nashville office, Tom is licensed in Tennessee, Texas and Louisiana. He has over 28 years' experience ...

Posted in: FINRA

The SEC and FINRA each issued February 3 cyber security "alerts" summarizing last year's sweep exams and pointing out the obvious. In two parts, the SEC's press-release covered the results of the Commission's 2013-2014 sweep exams and an investor bulletin. SEC Press Release 2015-20, here. The Commission's Office of Compliance Inspections and Examinations ("OCIE") conducted a "sweep exam" - or wide industry survey on the subject among broker-dealers and investment advisers- during 2013 and 2014. The good news is that a wide majority of them have have information security ...

Posted in: FINRA, SEC
FINRA Rule 2360 requires that members file reports for each account that has an aggregate position of 200 or more options contracts on the same side of the market covering the same underlying security or index. The reports are commonly called Large Options Position Reports ("LOPRs"). The LOPRs allow FINRA to, among other things, confirm that firms have not exceeded the limits in FINRA Rule 2360(b)(3). Currently the position limit rules require that all accounts acting in concert must be aggregated to ensure position limit compliance. The rule change would require that the position ...
Posted in: FINRA

The SEC's Office of Compliance Inspections and Examinations ("OCIE") released its 2015 Exam Priorities January 13. Director Andrew Bowden's annual list details OCIE's subject of focus for the coming year. The hot topics for 2015 include: For Retail securities sales: - The "retail-ization" of private funds, illiquid investments and structured or other alternative products that pose extra risks when complex products are sold to "mom and pop" investors; - Fees & "reverse churning" (a fixed asset-based fee on accounts with little or no activity) - when account or commission ...

Posted in: FINRA, OCIE, SEC
An all-public panel of FINRA arbitrators entered a preclusion order and awarded $750,000 in punitive damages for Respondents' failure to participate in discovery and disregard of pre-hearing filing requirements. Claimant filed a suitability claim (along with the usual companion counts) over some proprietary fund investments, among others. Respondents' discovery responses originally were due January 17, 2014. They did not oppose Claimant's March 2014 motion to compel and the Chair ordered production. Respondents failed to produce documents and responded only later to the ...
Posted in: FINRA

The Financial Industry Regulatory Authority ("FINRA") released its 10th annual Exam Priority Letter earlier this week (Jan. 6, 2015). The so-called "Errico Letter" advises broker-dealer member firms of the operational risks the regulator expects to focus on in its examination (and enforcement) program. Moving a little closer to a principles-based regulatory approach than the usual "hot issue" laundry list from past years, this year's Letter first addresses five key areas of concern: 1. Alignment of Customer/Firm Interest 2. Standards of Ethical Behavior 3. Strong ...

Posted in: FINRA
With only three official days left of the current Congress, conversations Wednesday turned towards cybersecurity in the financial sector. The Commodity Futures Trading Commission, Office of the Comptroller of the Currency, and the Securities Exchange Commission all discussed planned or ongoing strategies to prepare for future cyber-attacks, highlighting such methods as compliance examinations of firms' cybersecurity measures. These organizations' efforts emphasize the substantial scrutiny on the effects that cyber-attacks can have on both financial institutions and ...
Posted in: FINRA, SIFMA
Following the final 2014 meeting of the Board of Governors last week, FINRA announced its proposal to increase fees associated with cancelling or postponing an arbitration hearing. In a December 4, 2014 email to firms, FINRA reported that the Board proposed to amend Rules 12601 and 13601 of the Code of Arbitration Procedure to extend the time required to give notice of an arbitration cancellation and increase cancellation fees. Under the proposed rule, if a party requests and receives a postponement or cancellation less than 10 days from a scheduling hearing, it would have to pay an ...
Posted in: FINRA
Last Friday, FINRA proposed pay-to-play prohibitions that parallel and implement similar Investment Adviser Act provisions in Rule 206(4)-5. That IA Rule prohibits investment advisers from paying third-parties to solicit government-entity advisory clients unless the solicitor is a "regulated person" subject to similar pay-to-play provisions. The SEC adopted the IA Rule in July 2010, but this particular requirement wasn't triggered until the Commission's adoption of the Municipal Advisor Rule, which became effective this past July 1. FINRA's proposed Rules are modeled ...
Posted in: FINRA
An October 27 letter from Rep. Maxine Waters and seven other House Democrats (from the Financial Services & Oversight Committee) asked the SEC to double down on scrutiny of employer confidentiality agreements that might violate whistleblower protections. Whistleblower and Enforcement staff from the Commission already were focused on the issue through Enforcement's Foreign Corrupt Practices Act ("FCPA") section, "actively looking out" for improper agreements and threatening a "hard line" reaction to them. SEC Rules prohibit any person (not just SEC-reporting public ...
Posted in: FINRA, SEC

Since 2004, FINRA has required its member firms to include in settlement-agreement confidentiality clauses an exception expressly allowing a customer to respond to regulatory inquiries. See Notice to Members 04-44. FINRA recently updated that requirement to include express permission to be a whistleblower. FINRA's suggested language provides: Any non-disclosure provision in this agreement does not prohibit or restrict you (or your attorney) from initiating communications directly with, or responding to any inquiry from, or providing testimony before, the SEC, FINRA, any ...

Posted in: FINRA

Carlo DiFlorio, FINRA's Chief Risk Officer and Head of Strategy, told the annual meeting of the National Society of Compliance Professionals Monday that FINRA is emphasizing efforts to mitigate market risks, even as it regards US capital-market integrity as at its strongest historically. HFT & Algorithmic Trading DiFlorio addressed thee initiatives. First, FINRA examiners are focusing on firms' supervision of HFT and algorithmic trading, including pre-implementation testing and firm-wide "kill switch" procedures when something goes awry. Second, FINRA's Board decided ...

Posted in: FINRA
On September 30th, the Financial Industry Regulatory Authority (FINRA) announced a proposed rule that would implement the controversial Comprehensive Automated Risk Data System (CARDS). Under the proposed rule, FINRA seeks to implement automated data gathering from clearing firms and brokerages in a two-phase approach. The proposal seeks to take advantage of "technological advances [that] can be leveraged to obtain, store, manage and access large quantities of data to identify and quickly respond to potentially fraudulent and abusive behavior." In the first phase, "CARDS ...
Posted in: FINRA
The Financial Industry Regulatory Authority ("FINRA") recently filed a proposal with the Securities and Exchange Commission ("SEC") to amend FINRA's rule governing member firms' background investigations into associated persons applying for registration with the firm. Specifically, the proposed rule clarifies the current investigation procedures contained in FINRA Rule 3110(e) and adds a provision requiring member firms to adopt written procedures designed to verify the accuracy of the disclosures contained in an applicant's Uniform Application for Securities ...
Posted in: FINRA, SEC

The Second Circuit stayed its mandate last week to allow public-pension litigants to file cert petitions seeking review of its August holding that a subsequent account-agreement forum-selection clause requiring federal-court litigation trumps FINRA's rules requiring all member firms to arbitrate on a customer's request. Goldman, Sachs & Co., v. Golden Empire Schools Financing Auth., Nos. 13-797-cv, 13-2247-cv (2nd Cir. Aug. 21, 2014), here. We discussed the opinion here. The public-pension litigants argued three grounds for the stay. First, they wrote the Second Circuit's ...

Posted in: FINRA

FINRA celebrated its 75th Anniversary this September 18. It is the "largest independent regulator for all securities firms doing business in the United States," with a notionally voluntary membership of over 4,100 securities firms. Its mission is protecting investors, and FINRA is the primary cop on the beat, policing over 634,000 registered securities representatives. FINRA employs 3,400 people in 20 offices. It monitors 6 billion share trades a day and fined Wall Street over $74 million last year. Read the release here. FINRA is a voluntary membership organization you have to ...

Posted in: FINRA
The Financial Industry Regulatory Authority (FINRA) announced on Wednesday that it intends to discuss potential rule-making initiatives that would seek to increase the transparency of Alternative Trading Systems, including "dark pool" trading among brokers. FINRA will discuss the proposed rules on September 19th. Alternative Trading Systems, or ATS, consist of regulated fora for matching buyers and sellers for trades that do not occur within an exchange. The name "dark pool" derives from the non-public nature of some of these systems, whereby certain trades occur with little ...
Posted in: FINRA
The Second Circuit joined the Ninth in holding that a subsequent contractual forum-selection clause requiring federal-court litigation trumps the base requirement that FINRA member firms must arbitrate upon a customer's request. FINRA Rule 12200 provides member firms "must arbitrate a dispute ["between a customer and a member" "arising in connection with the business activities of the member"] under the Code if: … Requested by the customer…." Public-financing authorities brought FINRA arbitrations against Goldman, Sachs and Citigroup Global Markets over ...
Posted in: FINRA

On July 22, the SEC approved amendments to FINRA Rule 2081 that prohibit member firms from conditioning arbitration settlements (or seeking to) upon a customer's assent to CRD expungement relief. The Rule amendments prohibit paying any consideration or compensation for expungement relief and apply even if a customer suggests such a bargain. SEC Rel. No. 34-72649 (July 22, 2014). In cases that may warrant expungement relief under the conditions specified in Rule 2081, SIFMA's comment letter suggested, and FINRA responded approvingly to, using settlement-agreement language ...

Posted in: Expungement, FINRA, SEC

On June 30, 2014, the Financial Industry Regulatory Authority ("FINRA") sent its proposed rules to limit the definition of "public arbitrators" to those without any experience in the securities industry. Previously, an arbitrator who had in the past worked in the securities industry but did not currently work in the industry could qualify as a "public" rather than a "non-public" or "industry" arbitrator. See FINRA Rules 12100 and 13100. According to FINRA, people "who represent investors or the financial industry as a significant part of their business would also be classified as ...

Posted in: FINRA, SEC

It is obvious that broker-dealers and their registered representatives, as well as investment advisors, must be careful in making recommendations to their clients. But the rise of claims related to inaction in a client account should also give members of the securities industry cause for concern. In particular, the U.S. Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and other critics have begun to focus their attention on "reverse churning," a claim arising from an allegation that a registered representative or investment ...

Posted in: FINRA, SEC
On Friday, June 20, 2014, the Financial Industry Regulatory Authority ("FINRA") withdrew its proposed Rule 2243, which would have required disclosure and reporting of FINRA member recruiting practices. Essentially, the rule would have required disclosure of a recruiting bonus for a representative that exceeded $100,000. The initial response to the proposed rule was mixed, but FINRA submitted the rule to the Securities Exchange Commission ("SEC") for approval earlier this year. In withdrawing the proposal, FINRA cited the rigid timeline for approval under the Dodd-Frank Act ...
Posted in: FINRA, SEC

On June 23, 2014, BrokerCheck Information makes publicly available information regarding investment-related civil action(s) brought by a state or foreign financial regulatory authority dismissed pursuant to a settlement agreement about former associated persons of a FINRA member firm that were registered on or after August 16, 1999. Established in 1988, the public disclosure program known as BrokerCheck assists investors in making informed choices about the individuals and firms with which they conduct business. Past settlements will now be disclosed publicly for ...

Posted in: FINRA
On May 20, 2014, the Securities and Exchange Commission initiated proceedings to determine whether to approve a proposal by the Financial Industry Regulatory Authority, Inc, (FINRA) to amend the NASD and FINRA rules governing estimated valuations for unlisted direct participation program (DPP) and real estate investment trust (REIT) securities. On January 31, 2014, FINRA filed a proposed rule change to amend NASD Rule 2340 (Customer Account Statements) and FINRA Rule 2310 (Direct Participation Programs), both of which address per share estimated valuations for unlisted DPP ...
Posted in: FINRA, SEC

I wrote earlier that the SEC was wrong to extend its "admission of wrongdoing" policy (once reserved for extreme cases) to negligent software-glitch misreporting of trade-data in the Scottrade case. Burr blog here, (April 17, 2014); Law360 Securities article here, (June 2, 2014). On June 4, FINRA announced that its response to similar blue-sheet violations by three firms was a standard AWC ("neither admit nor deny") with a fine of less than half the amount assessed Scottrade by the SEC. As in Scottrade, the firms' violations stemmed from software problems and FINRA also found ...

Posted in: FINRA, SEC

The Alabama Court of Civil Appeals released a slip opinion on May 16, 2014 addressing enforcement of a nonsolicitation agreement against a licensed securities broker. See G.L.S. & Associates, Inc., and G.L. Smith & Associates, Inc. v. Keith Rogers, No. 2130322 (Ala. Civ. App. May 16, 2014) (Slip Opinion). The defendant (Rogers) worked for a securities firm (GLSA) and had an employment agreement that contained a nonsolicitation provision which prohibited Rogers from soliciting GLSA's clients for a period of two years after termination of employment. Rogers resigned from his ...

Posted in: FINRA
FINRA operates the Central Registration Depository ("CRD") - the central, publicly-accessible licensure and registration information source on the US securities industry. Industry members seek to remove - "expunge" - unfounded or merely negative information from their CRD records, while regulators seek to keep a full and accurate record available to the public. For both public claimants and industry defendants, however, CRD expungement became a bargaining chip in securities litigation: Claimants could add individual respondents to increase settlement leverage and ...
Posted in: FINRA
Tags: CRD, finra
On April 24, 2014, the Financial Industry Regulatory Authority (FINRA) announced that its board of governors had approved rules requiring that firms to run background checks on new hires, whether new brokers or transfers, to verify the information on their U4s. Amended FINRA Rule 3110, the supervision rule, will also require firms to establish procedures for verifying information on their representatives' U4s. FINRA itself will search public financial records and criminal records for registered representatives and registered individuals who have not been fingerprinted in ...
Posted in: FINRA
FINRA has submitted a proposal to the SEC to adopt FINRA Rule 2243 (Disclosure and Reporting Obligations Related to Recruitment Practices). In FINRA's words, Rule 2243 would require, in some cases, "specific disclosure by the recruiting member firm of the financial incentives a representative receives as part of his or her relationship with the new firm. The recruiting member firm would be required to provide the disclosure before a former retail customer of the representative makes a final determination to transfer an account to the new firm." Specifically, disclosure would be ...
Posted in: FINRA, SEC

Effective July 5, 2014, the Municipal Securities Rulemaking Board ("MSRB") implements a consolidation and re-write of its prior fail-dealing Rules and Guidance for municipal securities dealers. On March 7, the SEC approved: - Revisions to Rule G-19 on suitability. The revisions harmonize the Rule with FINRA's suitability Rule 2111, including its "reasonable-basis," "customer-specific" - including investment profile, "quantitative" (f/k/a churning), "investment strategies" (including explicit hold recommendations), with accompanying technical changes ...

Posted in: FINRA, SMMP
Tags: finra, MSRB, SMMP
This past February, FINRA issued an acceptance, waiver and consent ("AWC") against a firm and its global anti-money laundering ("AML") Compliance Officer ("CO") for failures in AML compliance regarding brokerage and custodial DVP transactions in penny stocks and unregistered securities through omnibus bank-customer accounts in "known bank-secrecy havens, such as Switzerland, Guernsey and Jersey." FINRA censured the firm and fined it $8 million, and issued an individual one-month suspension and $25,000 fine to its AML CO. The firm is exiting its equity brokerage ...
Posted in: AML, AWC, FINRA, SEC
Tags: AML, AWC, finra, SEC

On February 25, the Municipal Securities Rulemaking Board ("MSRB") proposed new Rule G-44 imposing a supervision and compliance requirements for Municipal Advisors ("MA's"). The Dodd-Frank Act imposed a new regulatory regime for MA's. New Rule G-44 imposes requirements familiar from broker-dealer regulation, including:

  • A supervisory system reasonably designed to assure compliance with applicable laws and regulations;
  • Written supervisory procedures ("WSP's") tailored to a registrant's business;
  • Registered principals in supervisory roles; and,
  • A Chief ...
Posted in: Dodd-Frank, FINRA, MSRB
As an investor, you should perform due diligence prior to having an out-of-state attorney represent you in a securities dispute. In an era where social media provides multiple channels for the advertising of an attorney's skill sets, an investor should take heed before making the decision to engage out-of-state counsel to represent them. For example, out-of-state attorneys must either hire local counsel or satisfy several requirements before appearing at the arbitration, or even at any mediation, of securities related matters in the following states: California, Florida ...
Posted in: FINRA
Tags: finra
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