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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

FINRA Panel Awards Over $11 Million to Defamed Former UBS Employee

By Kara Siegel of Shustak Reynolds & Partners, P.C. posted on Thursday, December 19, 2019.

Last week, a panel of FINRA arbitrators ordered UBS Financial Services Inc. to pay over $11 million to a former supervisor, including $7.5 million in punitive damages, for defaming him on his Form U5 and thus preventing him from obtaining alternative employment. Mark Munizzi worked as market-operations supervisor in UBS’s Chicago office. In February 2018, the market dropped sharply, and two accounts Munizzi oversaw lost significant value. UBS fired Munizzi in April of that year. UBS asserted that Munizzi had failed to respond to a notification of margin calls on the two accounts; Munizzi said he was provided no such notification. UBS also said that Munizzi had failed to properly supervise the risks of an uncovered options strategy and lied during an internal review of the incident. [...] Read More

FINRA Panel Upends TRO Against Former Broker

By Kara Siegel of Shustak Reynolds & Partners, P.C. posted on Friday, December 13, 2019.

Last week, a FINRA arbitration panel took the extraordinary step of ordering the parties to an arbitration to request dissolution of a temporary restraining order (TRO) imposed by a district judge in Nevada. On November 12, 2019, Edward Jones had secured a TRO and injunction preventing former broker Mike Peterson from contacting his former clients. Edward Jones argued that after running the company’s Henderson, Nevada office for 13 years, Peterson had decamped for rival Ameriprise, contacted at least 11 former customers using Edward Jones’s confidential client data, and sent transfer paperwork to at least 15 former customers. [...] Read More

What is Regulation Best Interest (Reg BI)?

By George C. Miller of Shustak Reynolds & Partners, P.C. posted on Friday, December 6, 2019.

In June 2019, the SEC adopted a new rule under the Securities and Exchange Act of 1934 requiring broker-dealers and their representatives to act solely in the “best interest” of their retail clients when making investment recommendations. The so-called “Regulation Best Interest,” or “Reg BI” imposes a new standard of conduct on broker-dealers and their registered representatives beyond the existing suitability obligations and, according to the SEC, will align the expected standard of conduct with retail customers’ reasonable expectation that the financial professionals with whom they work will, in fact, act in their best interest. [...] Read More

Mutation of the Bankruptcy Preference Claim into the Wrongful Payor Claim

By James J. Reynolds of Shustak Reynolds & Partners, P.C. posted on Wednesday, November 20, 2019.

Anyone who has been through it remains dumbfounded. Those about to experience it are sure to become flabbergasted. I am talking about a bankruptcy trustee’s ability to claw-back your hard-earned money because you were paid by the “wrong payor.” Some of you may be aware of a bankruptcy “preference claim” which occurs when one of your customers files for bankruptcy and the bankruptcy trustee seeks to force you to give back any payments from your customer during the 90 days preceding the bankruptcy, i.e. the Preferential Transfer ( 11 USC 547). The principal underlying “preference claims” is that all creditors should be treated equally and payments to any particular creditor made within 90 days of the bankruptcy is considered unfair, unless a valid defense is available, to the other creditors who may not have received any payment. This concern over financial abuse goes back to England’s Elizabethan era and the unscrupulous insolvent person giving away their money to friends or relatives rather than true creditors. [...] Read More