Beginning July 9, 2018, FINRA, the Financial Industry Regulatory Authority, will search public records to determine whether registered reps who move from one firm to another disclosed any prior bankruptcies, judgments or liens. [...]

On April 30, 2018, the California Supreme Court issued its long-awaited opinion in Dynamex Operations West, Inc. v. Superior Court, which significantly changed the standard for determining whether workers in California should be classified as “employees” or as “independent contractors” for purposes of the wage orders adopted by California’s Industrial Welfare Commission [...]

The industry-wide crackdown on expense account improprieties continues. In recent blogs I wrote about the crackdown by FINRA, the Financial Industry Regulatory Authority, and member firms on violations of expense reimbursement policies [...]

On April 18, 2018, the SEC voted 4 to 1 to propose the Standards of Conduct for Investment Professionals Rule making Package, a package designed to enhance the protection and decision-making of retail, or “Main Street,” investors.

In an effort to locate and identify brokers who excessively trade their clients’ accounts to benefit themselves through excessive trading commissions to the detriment of their clients, FINRA announced a new proposal to widen the net to ensnare brokers who “churn” client accounts.

Two rogue brokers made the news this week. One, a former Ameriprise broker in Los Angles, was arrested by the FBI and charged with money laundering and federal fraud...

Signaling the next chapter in the slow moving “fiduciary rule” saga, the Securities and Exchange Commission will meet next week to discuss the framework for a new, SEC-backed standard of conduct for brokers...

Dennis Stubblefield, a Partner at the firm, recently attended SEC Speaks, the Commission’s annual conference in which senior staff from all divisions and offices announce and comment upon key developments from the past year and set forth coming priorities [...]

For those entrepreneurial enough to form, own and operate a successful RIA firm, while there is great satisfaction in being the “captain of your own ship”, most RIA owners really have no idea of the market value of their firms.

For those entrepreneurial enough to form, own and operate a successful RIA firm, while there is great satisfaction in being the “captain of your own ship”, most RIA owners really have no idea of the market value of their firms.

Wells Fargo & Co. disclosed in a recent regulatory filing that its Wealth Management division, which includes FINRA member firm Wells Fargo Clearing Services, LLC (formerly Wells Fargo Advisors, LLC), is the subject of an SEC investigation to determine whether the firm accepted improper client referrals in violation of securities laws.

Under a FINRA proposal released this week, broker-dealers may no longer be required to supervise the activities of their registered representatives performed at unaffiliated RIA firms. The rule, if adopted, will substantially reduce the burden of B-D’s monitoring the outside business activity of the firm’s brokers performed at unrelated RIA firms.

Just months after exiting The Broker Protocol, UBS Financial Services has reportedly added a broad non-solicitation clause to bonus agreements certain advisors are required to sign before receiving their 2017 production bonuses...

On February 13, 2018, a federal district court judge denied a U.S. broker-dealer’s request for leave to compel internal regulatory documents from FINRA in an SEC enforcement action captioned SEC v. Lek Securities Corp., et al...

Each year, the Financial Industry Regulatory Authority (FINRA) outlines its core areas of focus through its annual Regulatory and Examination Priorities Letter. This year’s letter highlights a number of longstanding areas of focus, including fraud, suitability, anti-money laundering and private placement investments, as well as several new categories. Here are FINRA’s top priorities for 2018:

On February 5, 2018, a San Diego insurance agent, Shawn Heffernan, pleaded guilty to defrauding senior citizens and others out of nearly $1.5 million by soliciting funds for “investments,” and then spending the money on personal items such as jewelry, a Maserati, and three rental properties.

The facts speak for themselves. There is a steady and growing trend for brokers to leave one of the remaining four wirehouse firms (Merrill, Morgan, Wells Fargo, UBS) and move to one of the independent broker-dealers (IBD’s), RIA firms or smaller, regional firms. In 2016, the four wirehouses had a net exit of approximately $40 billion of assets leave them for one of the IBD’s and other advisor channels. In 2017, the movement of assets from the wirehouses to the IBD network accelerated dramatically. Approximately $75 billion moved from one of the four wirehouses to one of the IBD’s, a regional broker or an RIA firm.

At the end of October, Morgan Stanley, with a mere several weeks’ notice to all its thousands of brokers- many of whom joined Morgan when Morgan was a long-time member of the Protocol for Broker Recruiting (“Protocol”) and who entered Morgan themselves following the Protocol and bringing with them, from their prior firms, client information- exited the Protocol which it had signed back in 2006.   Smith Barney, with whom Morgan merged many years ago, had been one of the original three signatories to the Protocol back in 2004. The ostensible reason Morgan gave for exiting the Protocol was to provide better focus on its existing brokers and avoid the recruiting efforts of smaller, independent firms that Morgan alleges abused the Protocol solely to poach producers from Morgan and other wire houses.  What many believe to be the real reason, however, is to “pull up the drawbridge” and essentially trap its brokers as captives.  Morgan’s recent legal skirmishes since its “Prexit” on November 3rd, however, has shown it intends to vigorously and aggressively pursue defectors who either take client information or attempt to solicit those clients. Since the November 3, Prexit, Morgan has initiated at least two court actions seeking Temporary Restraining Orders and Preliminary Injunctions against brokers who left Morgan after its Prexit and who, Morgan alleges, took client information and solicited clients to move with them to their new firms.  Morgan obviously wants to send a loud and clear message to its now captive brokers- if you leave, you cannot take anything with you nor solicit your former clients or we will bring the heavy hand of the law down on you like a ton of bricks. John Fitzgerald, a New Jersey former Morgan broker, left Morgan in early December, one month after Prexit, to start his own firm. …

FINRA recently submitted a new proposal to the Securities and Exchange Commission which will greatly narrow, and substantially complicate, the ability of brokers to expunge- or remove- from public records including their FINRA CRD (Central Registration Depository) records and FINRA’s Broker Check, prior customer complaints.

On December 6, 2017, the Financial Industry Regulatory Authority (FINRA) released a report on recent findings by it Examination program, citing to key deficiencies in broker-dealer cyber security processes.