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.

As we wind down 2017, there has been a flurry of news over the Broker Protocol which began with Morgan Stanley’s announced departure from the group of over 1,500 financial institutions that have signed onto the Protocol since it was first adopted in 2004 by Smith Barney, UBS and Merrill Lynch.

In a growing number of high profile cases, often involving major producers and star brokers at major wire houses, the firms and FINRA have adopted a zero-tolerance policy for violations of expense account reporting. These crackdowns involve both firm funds and personal business development accounts (“BDA Accounts”), which are available at most wire houses and are funded with brokers’ pre-tax earnings. What is unusual is both the recent frequency of the crackdowns and the severity of the sanctions involved.

Several weeks ago, Morgan Stanley became the first major wire house to exit the Broker Protocol that Morgan signed back in 2006. Since exiting the Protocol, Morgan already has sought, and obtained, a Temporary Restraining Order from a state court judge preventing that departed broker- who joined Morgan when Morgan still was an active member of the Broker Protocol. Following Morgan’s lead, UBS, one of the initial three signers of the Broker Protocol back in 2004, has announced it also will leave the Broker Protocol by the first of December.

From Bitcoin to Ethereum, The Rise of Initial Coin Offerings Draws Regulatory Scrutiny The amount of capital raised through initial coin offerings (ICOs) has increased exponentially in just the last year. So far, in 2017, companies have raised over $3 billion compared to approximately $300 million raised between 2014 and 2016.

FINRA recently approved new policies aimed at increasing supervision and controls over so-called “high risk” brokers and financial advisors e.g., those with a history of significant past misconduct or regulatory problems.

While FINRA arbitrations were intended to provide investors and industry members a quick and relatively inexpensive procedure by which to settle their disputes with member firms, the fact is that a significant portion of FINRA arbitration awards remain unpaid and there is not much that FINRA is able to do about that.

As FINRA and the SEC make it a priority for the investing public to know as much about their investment professionals as possible, and as more and more investors are searching the FINRA Broker-Check web site to learn more about their advisers, expungement is an increasingly significant issue [...]

As FINRA and the SEC make it a priority for the investing public to know as much about their investment professionals as possible, and as more and more investors are searching the FINRA Broker-Check web site to learn more about their advisers, expungement is an increasingly significant issue [...]

On the heels of the recent Equifax hack disclosure, the U.S. Securities and Exchange Commission (SEC), the government agency responsible for regulating the nation’s securities and financial services industry, issued a press release September 20, 2017, announcing a significant security breach [...]

We just posted our overview of the SEC Hack. The agency has thus far specified just EDGAR as being compromised [...]

FINRA has issued new guidance on the use of social media and digital communications for member firms [...]

Wells Fargo now estimates that the firm opened 3.5 million phony bank and credit card accounts [...]

This past Monday, the Securities and Exchange Commission charged four former Atlanta-based LPL brokers with selling 200 privately-issued annuities [...]

The Financial Industry Regulatory Authority (FINRA) recently suspended [...]

According to FINRA CRD registration records, Morgan Stanley fired two long term, Boston-based brokers [...]

A panel of FINRA arbitrators recently awarded $1.4 million to [...]

The Financial Industry Regulatory Industry (FINRA) is a non-profit, non-governmental organization authorized by Congress [...]