FINRA Disciplinary Action Report for brokers and brokerage firms for August 2017
FINRA is considering a possible multi-year initiative called FINRA360, wherein the self-regulatory organization is conducting a whole review of day to day functions and programs, with input from both inside as well as outside the corporation.
Former stockbroker, William Bucci, bilked greater Philadelphia and New Jersey investors out of more than $3 million through a Ponzi scheme involving fake imports of Italian wine and olive oil.
FINRA Disciplinary Action Report for April 2017.
FINRA’s fine and demand for restitution, along with Lewis’ long prison sentence, sends a strong message that such failures by broker-dealers will not be tolerated. In today’s climate where protecting seniors has become paramount, we expect to see more and more of such regulatory actions.
Finance and securities industry regulators have mobilized their significant resources in an effort to protect American investors, especially retired and senior citizen investors.
A new proposal by FINRA will give older investors more protections. Brokerage firms will be able to temporarily hold accounts in which financial exploitation is suspected if the account holders are 65 years or older.
This week a number of articles suggested that, as we feared, Wall Street has learned nothing from the recent financial crisis. Well, maybe not nothing. Rather than steering clear of the securitized debt responsible for the collapse of the real estate market and much of the financial market as well, Wall Street investment firms are working on new and innovative ways of resurrecting securitized financial products (you remember that stuff, right? Layer upon a layer of bad debt with an icing of good debt on top...).
Hopefully, we've all learned in the meantime to be more vigilant and skeptical of the finance world's "miracle" products. Not only that, but the Financial Industry Regulatory Authority and its CEO, Richard Ketchum, are continuing to broadcast their message of "Heightened Supervision" by investment advisors and brokerage firms when it comes to complex financial products. As Ketchum plainly warns, if broker-dealer firms want their affiliated financial advisers to offer tricky investment opportunities like options trading, variable annuities, or complex products like leveraged and non-traditional ETFs, they MUST undertake greater supervision of the advisers and of the performance of the products themselves.
For investors who have already been the victim of the misuse or abuse of one of those products, it's not just a warning: it's a chance to win money back.
As we at The Green Firm have seen firsthand in recent cases, it can often be difficult to recover money from an individual broker's misconduct. Often it's simply a matter of "you can't get blood from stone." BUT, that advisor's misconduct often extends to the supervising broker-dealer. And thanks to Ketchum's strong message, it should become increasingly easy to hold broker-dealer firms responsible for failing to deliver the kind of "Heightened Supervision" that complex financial products require, according to FINRA. Not only does this supervision apply to the proper use of specific products; it also applies to the suitability of specific products to specific investors. In other words, FINRA's concept of "suitability" dictates that there must be an affinity between the investment product and the customer. If you're a risk-averse or conservative investor, your broker should not have you invested in high-risk, complex financial products.
Finally, in the article, Ketchum mentions that, "When a broker moves to a new firm and calls a customer to say, 'You should move your account with me because it will be good for you,' the customer needs to know all of the broker's motivations for moving. In some instances, recommendations to customers can be driven by direct and indirect compensation incentives to the financial advisor and the firm itself."
We at The Green Firm would just like to remind that your own interests and the interests of your broker are not always aligned. The best protection you have against broker misconduct is free: ask lots of questions. If your broker switches employers and insists you migrate with them, be sure to ask what's in it for them.
A recent lawsuit by San Francisco Giants hurler Barry Zito alleges that his friend used their relationship to mislead Zito into making a $3M investment on a fitness software startup that never materialized. We've seen misrepresentation like this before, and we're pretty sure we'll see it again. Unfortunately, pro athletes with large salaries and limited investment knowledge are highly susceptible to manipulation by stock brokers and friends alike. Precisely because they have a lot of money, they tend to be over-trusting of friends who they believe have their best interests in mind. Not always the case. And it's important to keep in mind that perpetrators of securities fraud are not always stock brokers or financial advisors--they can be anyone who enters upon a securities contract.
f you or someone you know think you've been the victim of securities fraud or misrepresentation, please The Green Firm immediately for a free consultation.