Newsletter Signup

Blog

Search Our Blog

THE BROKER PROTOCOL: NEW TREND EMERGING AS COURTS ALLOW BROKERS TO SERVICE FORMER CLIENTS?

By Sara Sabzerou, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, October 13, 2020.

Just last month, Florida federal Judge Tom Barber shot down Wells Fargo’s motion for an emergency temporary restraining order (“TRO”) against their former brokers, Brady Pedler and Joseph Santana. Wells Fargo claimed the firm would suffer “irreparable harm” due to Pedler and Santana’s solicitation of former clients to their new employer, RBC Wealth Management. Pedler and Santana managed $306 million in assets during their time at Wells. This ruling followed a similar result in Michigan, where Judge Janet Neff denied J.P. Morgan’s emergency TRO motion against a former broker who left to join Ameriprise Financial. [...] Read More

Confidentiality is a Top Priority and You Should Make It Yours, Too

By Robert R. Boeche II, Esq., Partner of Shustak Reynolds & Partners, P.C. posted on Wednesday, September 30, 2020.

The SEC and other regulatory bodies have made protecting the non-public personal information of clients a top priority. This can be seen in the multitude of rules, enforcement actions and books, and records requirements imposed upon registrants in the past few years. [...] Read More

FINRA SUSPENDS EX-MORGAN STANLEY BROKER WHO ADVISED CLIENT ON OUTSIDE TRADING

By Erwin J. Shustak, Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Monday, September 28, 2020.

It can be difficult to know whether a broker’s mistake constitutes a private securities trading violation. Some rules are clear-cut; others are not. While employed as a Morgan Stanley Wealth Management broker, Christopher Reid executed approximately 200 equity and options trades for a new client his employer previously had rejected as a potential firm client. After being rejected by Morgan Stanley, that client opened a self-directed brokerage account with another FINRA member brokerage in June 2018. The name of the brokerage firm where these trades took place was not disclosed in the Letter of Acceptance, Waiver and Consent (“Consent Letter”), which is a document commonly created through settlement of the FINRA disciplinary process. [...] Read More

SEC MODERNIZES THE ACCREDITED INVESTOR DEFINITION

By Robert R. Boeche II, Esq., Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, September 15, 2020.

On August 26, 2020, the Securities and Exchange Commission (SEC) adopted updates to the definition of “accredited investor” under the Securities Act of 1933. Historically, only investors who met specific income or net worth requirements qualified for the accredited investor designation, which permits participation in private markets. Now, an individual can also qualify as an accredited investor based on established, clear measures of financial sophistication. Also, certain entity types that were previously excluded from the designation are now allowed. [...] Read More

Morgan Stanley’s Plans for E*Trade RIA Custody Business in Question

By Jonah A. Toleno, Partner of Shustak Reynolds & Partners, P.C. posted on Friday, August 28, 2020.

Earlier this year, Morgan Stanley announced plans to purchase E*Trade Financial Corp., with the deal scheduled to close by end of 2020. The acquisition would include E*Trade’s $360 billion in assets, $18.2 billion of which is comprised of custody business for Registered Investment Advisors (RIAs). Many wonder what Morgan Stanley, a global wirehouse firm with over 16,000 advisors who primarily engage in brokerage and commission-based business, plans to do with E*Trade’s RIA business. Unlike other, independent brokerages, Morgan Stanley does not currently permit its advisors to operate on RIA platforms. [...] Read More

CERTIFIED FINANCIAL PLANNER (“CFP”) ALERT: CFP BOARD RELEASES FINAL PROCEDURAL RULES FOR CODE OF ETHICS AND STANDARDS OF CONDUCT FOR CFP PROFESSIONALS

By Erwin J. Shustak, Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Wednesday, August 12, 2020.

The CFP Board certifies and bestows the CFP designation on professionals who meet rigorous education, training, and ethics standards. In an average year, the CFP Board conducts 6,900 background checks as part of their dual mission of CFP certification and enforcement of professional standards. [...] Read More

FOLLOWING REG BI, DOL PROPOSES TO EASE RESTRICTIONS ON ADVISER COMPENSATION ON RETIREMENT ACCOUNTS

By George C. Miller, Esq. and Domanic Glenn of Shustak Reynolds & Partners, P.C. posted on Thursday, July 9, 2020.

The SEC's Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934 establishes a "best interest" standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts. The new rule, which formally took effect June 30, 2020, is viewed as a replacement for the Department of Labor’s (“DOL”) previous, and now dead, fiduciary rule. One of many objections from the financial industry to the DOL fiduciary rule were the significant limitations it placed on the ability to collect fees and commissions in connection with retirement accounts. [...] Read More

US Supreme Court Rules It Is Illegal To Fire Employees For Being Gay Or Transgender

By Jonah A. Toleno, Partner of Shustak Reynolds & Partners, P.C. posted on Monday, June 29, 2020.

Earlier this month, the United States Supreme Court ruled in Bostock v. Clayton County, Georgia that it is illegal for employers to fire employees solely for being gay or transgender. The Court’s ruling, a 6-3 decision, addresses three cases simultaneously: Bostock v. Clayton County, Georgia; Altitude Express, Inc., et al. v. Zarda et al., and R.G. & G.R. Harris Funeral Homes, Inc. v. Equal Employment Opportunity Commission et al., all of which involved an employer terminating “a long-time employee simply for being homosexual or transgender.” [...] Read More

Financial Advisor Crisis: Succession Plans

By Robert R. Boeche II, Esq. and Domanic Glenn of Shustak Reynolds & Partners, P.C. posted on Friday, June 19, 2020.

Financial advisors (“FA’s”) at registered investment advisory firms (“RIA’s”) are facing yet another challenge atop already shaky markets. According to the June 2020 DeVoe & Co. Study Report[1] (the “Report”), owners and senior members of RIA's are “approaching a succession crisis.” The Report notes that while the average RIA owner is in their early 60s and would prefer to pass on their loyal clientele and sell their well-established business internally, nearly 57% of surveyed RIA’s claim that a leadership transition would not only be difficult, but would create a “significant or severe challenge,” for the RIA. However, it is not too late to begin creating and bolstering a comprehensive succession plan. [...] Read More

MERRILL LYNCH ORDERED TO REIMBURSE $7.2 MILLION IN MUTUAL FUND OVERCHARGES

By Erwin J. Shustak, Esq. and Holly Nicoll, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, June 16, 2020.

FINRA recently announced that Merrill Lynch will pay $7.2 million in restitution to customers overcharged on mutual fund accounts. FINRA’s enforcement action and fine affects over 13,000 separate Merrill Lynch accounts whose owners did not receive the available sales charge waivers and fee rebates available through rights of reinstatement. According to FINRA, rights of reinstatement allow investors to purchase shares of a fund after previously selling shares of that fund or another fund in the same fund family, without incurring a front-end sales charge, or to recoup all or part of a contingent deferred sales charge. The overcharges impacted customers in the aggregate amount of approximately $6 million. FINRA considers this to be a “Supervisory Failure” by Merrill Lynch. [...] Read More