FINRA Disciplinary Action Report: June 2019

Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

Regulator Continues to Battle Unsuitable Leveraged ETFs

The securities industry self-regulator, FINRA, has once again warned broker-dealers and investors over its unsuitable sales of leveraged and inverse ETFs. Over the past few years, ever since these sophisticated products rose to prominence, FINRA has repeatedly issued regulatory notices and investor alerts about the perils of investing in leveraged ETFs. The agency has also fined numerous broker-dealers and individual brokers for poor sales practices and supervision of leveraged ETFs.

Unit Investment Trusts May Present Opportunity for Churning

At the end of the maturity period of a Unit Investment Trust, you and your financial advisor may decide to rollover the investment into a new UIT. While this is a perfectly legitimate transaction, it also opens up the opportunity for an unscrupulous broker to rollover the investment more than once — perhaps many times.

When this excessive rolling-over of a UITs is done to gain a financial advisor illegitimate fees, it’s called churning. Churning is considered a form of misconduct and may open a financial advisor up to regulatory action, fines, and disbarment from FINRA.

What Happens When Your Broker Leaves a Firm

As an investor, you may have already experienced the disorientation that comes with having your financial advisor switch from one broker-dealer to another; or to an investment advisory or insurance company. The practice is not at all common, and the reasons for such switches are by no means always a bad thing for investors. Often a high-performing broker will be poached from a smaller firm by a larger one; or an ambitious broker will move from one company to another because of the higher quality of support, compliance, and information offered at another shop. That’s all well and good — but where does it leave the investor?

FINRA Compiles List of "Bad Brokers"

As the securities industry regulator, FINRA, looks at new ways of cleaning up the brokerage business, it has zeroed in on “rogue brokers” as being responsible for a disproportionate number of infractions and instances of misconduct. FINRA has been motivating a new rule that would target a few hundred individual brokers who have checkered backgrounds by forcing firms that employ them to heighten supervision of high-risk financial professionals.

Senators Seek to Protect Seniors Who Will Wealth to Brokers

After a Maryland financial advisor inherited $500,000 from an elderly client, lawmakers have asked the governing body of the securities industry, the Financial Industry Regulatory Authority (FINRA), to provide guidance over whether and how brokers can inherit wealth from customers, especially senior investors.

FINRA Disciplinary Action Report: May 2019

Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

FINRA Disciplinary Action Report: April 2019

Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

Debate Over Mandatory Arbitration Heats Up

The Investor Choice Act, authored by Rep. Bill Foster (D-Ill.) seeks to bar not only broker-dealers but other corporations from deploying mandatory arbitration agreements. At a recent hearing, the Act met strong opposition from industry groups such as SIFMA as well as the Chamber of Commerce. Tom Quaadman, executive vice president with the Chamber of Commerce, defended the arbitration process as a vital dispute resolution tool that helps clients and advisors alike avoid lengthy and costly litigation.

FINRA Investor Alert: Social Sentiment Investing

Last week, the securities industry watchdog FINRA issued a new Investor Alert concerning “Social Sentiment” tools and investing. According to the regulatory agency, a new form of investing data has been taking hold of investors, and it’s not so reliable.

A Quick Check to Make Sure Your Broker is "Legit"

One of the hardest lessons many investors who have been taken in by a fraudulent financial professional or broker is that they might have known better. In the process of an investigation, they see that there was actually information available to them that indicated that their broker was either “rogue” or, in some cases, “barred” from practicing as a broker at all.

FINRA Warns about Broker Imposter Scams

A few weeks ago the securities industry watchdog, FINRA, announced that it had received reports that scam artists had been calling the public and impersonating FINRA executes. This week, FINRA warned investors about a new scam: fraudsters who impersonate brokers and financial advisors.

FINRA Disciplinary Action Report: March 2019

Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

New FINRA Rule Could Speed Up Arbitration for Senior Investors

According to FINRA’s latest statistics, all arbitration proceedings take an average of 14.2 months to close. For cases decided by an arbitration panel, the average time is 16.5 months. For those decided “on papers” — claims with no hearings — the average is 6.5 months.

Legislation Could End Mandatory Arbitration for Securities Disputes

On Friday a ranking Democratic member of the Senate Banking Committee, Sen. Sherrod Brown, introduced a bill aimed at ending pre-dispute arbitration agreements that have become commonplace in business-to-consumer businesses. The bill, called the Arbitration Fairness for Consumers Act, is specifically focused on student loan and credit card contracts; however, it has enormous implications for the securities industry, in which almost every brokerage contract includes a binding arbitration clause.

FINRA Disciplinary Action Report: February 2019

Each month, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.

FINRA Bans Broker Who Sold $3.5M in Woodbridge Ponzi

In order to strengthen the message that such schemes will not be tolerated, and will be punished tot he fullest extent of the law, the financial industry watchdog agency, FINRA, has begun to look at the role of individual brokers in shoring up the Woodbridge scam. After all, Woodbridge’s success, during which it swelled to a value of over $1.2 billion at its peak, relied heavily upon an extensive network of brokers and investment professionals who sold Woodbridge promissory notes to retail investors.

SEC Takes Aim at Unregistered Advisors in New Alert

In a new alert, the SEC is seeking the help of investors to do background checks on new and existing brokers who may or may not be registered financial and investment advisors.

FINRA Could Learn From Jay-Z's Demand for Diversity in Arbitration

FINRA has recently faced similar criticism of the suspicious old, white, and male composition of its arbitrator pool. Specifically, of the more than 7,700 arbitrators available through FINRA, around 70% of them are male and most are white. While those numbers have been improving over the past few years thanks to efforts by FINRA toward reform, there is still a long way to go.

Broker-dealers May Be Responsible for Selling Away of Woodbridge

A recent judgment in FINRA arbitration for nearly a quarter of a million dollars against a broker who sold Woodbridge notes to investors has struck fear in the hearts of many firms who weren’t paying attention to their brokers over the past few years. If one firm can be held responsible for the failings of a broker, they all potentially can. And that’s a billion-dollar problem.