Posts tagged ‘securities compliance’
FINRA Wants “Senior Designations” to Have Real Meaning
According to a recent investmentnews.com article the Financial Industry Regulatory Authority (FINRA) “is warning firms about the use of designations implying special expertise in working with older investors.”
FINRA performed a survey in 2011 about the use of “senior designations.” They surveyed 157 firms that varied in terms of “size, location, product mix and business model” and found that “responses point to widespread use of senior designations in the broker-dealer community.” FINRA found that 68% of the firms said that they allowed the use of “senior designations” by their registered representatives.
The FINRA survey uncovered that the use of these “senior designations” by firms varied widely and that they were often not as meaningful as it seems FINRA would like. FINRA’s report on the survey stated that, “the survey indicated that some supervisory procedures were not particularly discerning regarding the quality of the designations that registered persons were permitted to use.” FINRA indicated that the majority of the firms “require, at a minimum, registered persons to obtain prior approval or to use only designations that have been pre-approved by the firm.” However, they also found that overall “some supervisory procedures were not particularly discerning regarding the quality of the designations that registered persons were permitted to use.”
FINRA continues to find ways to attempt to protect retired and elderly investors from being taken advantage of by fraudsters and financial professionals alike. FINRA’s report on the survey outlined some appropriate practices with relations to the “senior designations” and “…encourages firms to consider implementing…” them.
The White Law Group is dedicated to investor protection and all too often speaks to retired investors who have suffered as a result of securities fraud and/or the unethical practices and unsuitable recommendations of their financial professional.
If you believe you have been the victim of securities fraud and would like to speak to a securities attorney about your potential to recover investment losses please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
UBS Fined $12 million by FINRA for Regulation SHO violations and Failure to Supervise
The Financial Industry Regulatory Authority (FINRA) recently said in a release that “it has fined UBS Securities LLC $12 million for violating Regulation SHO (Reg SHO) and failing to properly supervise short sales of securities.” UBS has “neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
FINRA alleges that these violations caused “millions of short sale orders [to be] mismarked and/or placed to the market without reasonable grounds to believe that the securities could be borrowed and delivered.”
Regulation SHO “requires a broker-dealer to have reasonable grounds to believe that the security could be borrowed and available for delivery before accepting or effecting a short sale order.” Further firms are required “to obtain and document this “locate” information before the short sale occurs reduces the number of potential failures to deliver in equity securities.”
The charges and resulting fine show that FINRA does not believe that UBS fulfilled their obligation to the regulations or reasonably supervised their short sales to ensure Regulation SHO was followed. FINRA’s investigation found that “UBS placed millions of short sale orders to the market without locates, including in securities that were known to be hard to borrow.” Further FINRA found “that UBS mismarked millions of sale orders in its trading systems.” And finally FINRA stated that, “UBS had significant deficiencies related to its aggregation units that may have contributed to additional significant order-marking and locate violations.”
FINRA executive Brad Bennett emphasized that, “Firms must ensure their trading and supervisory systems are designed to prevent the release of short sale orders without valid locates, and properly mark sale orders, in order to prevent potentially abusive naked short selling. The duration, scope and volume of UBS’ locate and order-marking violations created a potential for harm to the integrity of the market.”
If you have questions related to securities fraud or securities regulations and would like to speak to a securities attorney you may call our Chicago office at 312/238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
The Difficult Balance Between a Financial Advisors’ Fiduciary Duty and Pushing Their Own Products
Andrew Haigney recently wrote an interesting article for businessinsider.com where he called investment advice “one of the greatest scams of our time.”
His motivation for writing his article was to expand on the theme of Yale University’s Chief Investment Officer David Swensen’s August NY Times Opinion piece about mutual funds where he called for an increase in investor education and “call[ed] for retail brokers to be held to a fiduciary standard.” Swensen expressed his concern that retail brokers selling mutual funds failed to show investors how the funds they were selling matched up against low-cost index funds.
Haigney feels the problem of fiduciary duty to the client versus a desire to sell products that are favorable to the broker’s firm and bank accounts extends beyond just mutual funds. He says that the problem is that “Investment advice has become a ‘product,’ and investment advisers steer prospective clients right into their own products.” This is a huge issue according to Haigney because “the point of sale” is where investors get their investment information and advice. He cites a 2008 SEC study that “found that 95 percent of investment advisory firms with individual clients also provide proprietary portfolio management services for individuals” and says, “firms make their money through portfolio management services, not dispensing investment advice.”
A firm giving investment advice has a fiduciary responsibility to give advice in the best interest of the client. But, as Haigney notes, “how often at the end of a sales presentation do you think investment advisors…tell a potential client that they may be better off going to a larger firm with more experience…or, as Mr. Swensen suggests, explain to a prospective lucrative client that their investment objectives can be better met by investing in a low cost index fund?” Haigney makes the obvious point that it is extremely difficult to fulfill fiduciary obligations and please your employer when the “name of the game in asset management is to get money in the door and start generating fees.”
Under securities regulations, registered advisors and brokers are required to uphold a fiduciary standard and advise their clients to invest in products that are suitable for each investors’ unique circumstances. If a financial professional fails in these duties to their clients, those failures may be actionable under current securities regulations and the investors may be able to recover losses.
For the full text of Mr. Haigney’s article visit http://www.businessinsider.com/investment-advice-is-one-of-the-greatest-scams-of-our-time-2011-9
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at www.whitesecuritieslaw.com
Potential FINRA Rule Change on Collective Actions for Financial Advisors
According to the Investment News, Finra will be proposing a rule change that might help brokers pursue class action employment claims.
The Financial Industry Regulatory Authority Inc. wants to ban from its arbitration forums so called “collective action” claims brought under the Fair Labor Standards Act or the Age Discrimination in Employment Act.
That would make it easer to pursue court claims, according to plaintiff’s attorneys who filed the suits.
The Finra board last week authorized its staff to file a proposed rule change with the Securities and Exchange Commission. The SEC would have to approve the proposal.
The rule change is being sought after federal courts last fall, and again in February of this year, ordered that collective-action wage-and-hour cases be heard in Finra arbitrations.
Finra has maintained that these types of cases, as well as class actions, are not allowed in its dispute resolution system. However, its rules mention class actions only.
Collective actions require covered plaintiffs to opt into the lawsuit, whereas class actions require an opt-out.
It appears that a rule change by Finra would help brokers pursue wage-and-hour claims.
In the past, in banning class actions from the Finra arbitration system, Finra and the SEC have argued that such cases are better handled by courts.
Several years ago, all the major brokerage firms settled broker suits over alleged violation of wage-and-hour laws, as well as overtime violations. As a result, firms adjusted their expense-sharing policies and compensation plans, and some brokers received payments.
If you are a broker seeking representation in an employment dispute with your current or former employer, the securities attorneys of The White Law Group may be able to help.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Local California Counsel for FINRA Arbitrations
The White Law Group often serves as local counsel throughout California for out-of-state attorneys in FINRA securities arbitration matters. California Bar Rules require that an attorney be licensed in the state of California to participate in a California arbitration or that the attorney partner with a local attorney.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with attorneys licensed to practice in California. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
If you want to retain a firm to assist you in a FINRA arbitration that knows the FINRA rules and arbitration process, The White Law Group is the choice for you.
To discuss your local counsel matter, please contact the firm at 312-238-9650.