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FINRA RULE 2010 AND ALTERING SIGNED CLIENT ACCOUNT FORMS DURING THE CORONAVIRUS PANDEMIC

By Erwin J. Shustak of Shustak Reynolds & Partners, P.C. posted on Thursday, April 9, 2020.

FINRA rule 2010 is a sweeping provision that mandates brokers and licensed persons subject to FINRA’s jurisdiction maintain “high standards of commercial honor”. One of the most common violations of that rule, which are aggressively pursued by both employing firms and FINRA, is the prohibition against modifying, completing or altering, in any way, a signed client account document or other form. A recent case illustrates the risk to licensed persons who modify, complete or alter those forms and documents- even if they do so at the client’s request or for the client’s benefit and particularly during the coronavirus pandemic. [...] Read More

Will Morgan Stanley Compensate Clients Following Massive Order-Entry Outage?

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Wednesday, March 25, 2020.

On March 25th, Murphy’s law took full effect when Morgan Stanley’s order entry and order status systems ground to halt, blocking financial advisors and clients from viewing account information and entering trades. The firm later reported that “multiple applications are experiencing latency or may be unstable.” Some clients reported problems accessing their accounts online; others reported seeing incorrect account values and balances. [...] Read More

Investor Alert: SEC Cautions Coronavirus Investment Scams on the Rise

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Wednesday, March 25, 2020.

In February 2020, the Securities and Exchange Commission (SEC) issued an alert, cautioning investors to be wary of scams tied to the Coronavirus pandemic. It is common for fraudsters to use the latest news developments to lure investors into scams. Nothing has been more prevalent on the news over the past several weeks than Coronavirus/Covid-19. [...] Read More

The Coronavirus Pandemic Presents a Unique Financial Advisor Transition Scenario

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Wednesday, March 25, 2020.

The past several weeks (which have felt like years) have turned the financial industry on its head. The market has seen unprecedented declines, followed by unprecedented increases as Congress shored up a $2 Trillion—with a T—economic bailout package. That staggering figure represents approximately 10% of the entire country’s annual gross domestic production. Just one of many unprecedented steps the government, and society, have taken to curb the damage caused by the virus. [...] Read More

Reminder: Form ADV Annual Amendment Filing Deadline and Potential Relief

By Robert R. Boeche II of Shustak Reynolds & Partners, P.C. posted on Thursday, March 19, 2020.

This is a reminder to registered investment advisers about the requirements surrounding your Form ADV annual amendment filing. For most registered advisers,[1] the deadline to file the firm’s Form ADV is rapidly approaching. According to Rule 204-1 of the Investment Advisers Act of 1940, as amended (the “Advisers Act”), registered advisers are required to file an annual amendment to Form ADV Parts 1 and 2 “annually, within 90 days of the end of your fiscal year.” [...] Read More

What is the California Consumer Privacy Act?

By Joseph M. Mellano of Shustak Reynolds & Partners, P.C. posted on Monday, March 16, 2020.

The California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020, significantly changes businesses’ legal obligations in collecting and maintaining consumers’ personal data. Importantly, the CCPA does not apply to all California businesses. The law applies only to non-governmental, for-profit entities that “[do] business in the State of California” and (a) have gross adjusted annual revenues in excess of $25,000,000; (b) annually buy, sell, or receive personal data of 50,000 or more consumers, households, or devices; or (c) derive more than half of their annual revenue from selling consumers’ personal information. [...] Read More

Form CRS – What Does it Mean for Registered Investment Advisers

By Robert R. Boeche II of Shustak Reynolds & Partners, P.C. posted on Wednesday, March 4, 2020.

A lot of noise has been made about the new Form CRS, but what exactly does it mean for registered investment advisers? On June 5, 2019, the Securities and Exchange Commission (the “SEC”) adopted Form CRS and new rules, as well as amendments to its forms and rules, under both the Investment Advisers Act of 1940 (“Advisers Act”) and the Securities Exchange Act of 1934 (“Exchange Act”). While changes to the Exchange Act were substantive, for purposes of this article, only changes to the Advisers Act and subsequent additional requirements to investment advisers registered with the SEC will be discussed. Below is a “Q&A” of some of the more common questions being asked about Form CRS. [...] Read More

Three Tips for New Investors

By Domanic Glenn of Shustak Reynolds & Partners, P.C. posted on Friday, January 24, 2020.

Investment opportunities come in all shapes and sizes – from traditional 401(k) contributions and Registered Investment Advisor (RIA) firms to hedge funds and venture capital start-ups. Any investment opportunity comes with its own specific set of legal challenges that may jeopardize both novice and seasoned investors alike. Anyone, however, can navigate the uncertain investment landscape and avoid costly legal pitfalls with input from financial professionals and experienced legal counsel. [...] Read More

RIA Alert: SEC’s 2020 Examination Priorities Include Additional RIA Examinations

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Monday, January 13, 2020.

Each year, the Securities and Exchange Commission (SEC) publishes a list of its examination priorities for the coming year. Similar to the 2019 list, the SEC’s list for 2020 includes enhanced focus areas related to investment advisers, investment companies, broker-dealers and municipal advisors. Specifically, the SEC pledges to focus its resources on examining RIAs that have never been examined, including newly formed RIAs as well as those already in operation. The RIA examinations will include those RIAs advising retail investors as well as private funds. Broker-dealer examinations will focus on issues pertaining to the implementation of new regulations, including regulation “Best Interest,” or Reg BI. [...] Read More

FINRA Panel Denies J.P. Morgan Request for Injunction

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Friday, January 3, 2020.

A FINRA arbitration panel has denied J.P. Morgan Securities’ request for a permanent injunction preventing its former broker, Eric Weiss, from contacting clients with whom he worked at the firm. Weiss left J.P. Morgan for Raymond James earlier in 2019. Soon after he resigned, J.P. Morgan sued in Indiana federal court seeking an emergency temporary restraining order (TRO) barring Weiss from contacting clients until FINRA’s arbitration division conducted a full hearing on the dispute. [...] Read More