Monthly Archives: August 2013

FINRA is not too busy to be concerned about churning

It’s an old FINRA favorite. And a similar tale will probably appear in the FINRA pages each and every month.

“X (CRD #123456, Registered Representative, Yourtown, NJ) was fined $11,741.78, plus interest, which represents disgorgement, and barred from association with any FINRA member in any capacity. The National Adjudicatory Council (NAC) imposed the sanctions following appeal of an Office of Hearing Officers (OHO) decision. The sanctions were based on findings that X effected unauthorized trades in a customer’s traditional Individual Retirement Account (IRA) at his member firm, had de facto control over the account, and excessively traded in the account, which was inconsistent with the customer’s financial circumstances and investment objectives.

The findings stated that X excessively traded the accounts with scienter, and consequently, churned the customer’s account. The findings also stated that the firm had warned X to get his numbers up, and he undertook the excessive trading in the customer’s account to solidify his tenuous employment position at the firm and generate additional commissions for himself.”

Tomorrow's Financial Services, Inc.

New Rules Governing Communication with the Public

FINRA Provides Guidance on New Rules Governing Communications With the Public

FINRA staff has received a number of questions since it published Regulatory Notice 12-29, which announced SEC approval of FINRA’s new rule on communications with the public. The new communications rules become effective February 4, 2013. To provide additional guidance on compliance  with the new rules, FINRA has published a set of questions and answers on the Advertising Regulation page on the FINRA website.

Questions concerning this Notice should be directed to:

  • Thomas A. Pappas, Vice President and Director, Advertising Regulation,  at (240) 386-4553; or
  • Joseph P. Savage, Vice President and Counsel, Investment Companies Regulation, at (240) 386-4534.

http://www.finra.org/industry/regulation/notices/2013/p197617

Pershing: MyClientView

DId you know that you can see exactly what your client sees when they are logged in to NetExchangeView?

When logged in to Pershing: go to Accounts, Other, MyClientView. Here you can input the Subscriber ID, Account Number or Client Name and display the client’s NetExchangeView information. Continue reading

Tomorrow's Financial Services, Inc.

Tips to Protect Financial Information

FINRA published, “Keeping Your Account Secure: Tips for Protecting Your Financial Information.”

According to FINRA, identity theft has advanced well beyond “dumpster diving” to recover discarded account statements or other records that have not been shredded, though this old-fashioned method still is a threat. In addition, some identity thieves “use keystroke-logging software to capture usernames and passwords, disseminating these programs through instant messages, emails, or freeware.” Likewise, “others ‘phish’ for sensitive information by sending phony emails that purport to come from a legitimate financial institution but which ask for information your firm would never request through email – such as confirmation of an account number, password, credit card number, or Social Security number.”

The FINRA publication discusses a dozen steps that investors can take to secure their brokerage accounts as well as other personal financial information. “more” Continue reading

Tomorrow's Financial Services, Inc.

Additional Guidance on FINRA’s new Suitability Rule

Guidance on FINRA’s Suitability Rule

Executive Summary

In November 2010, the Securities and Exchange Commission (SEC) approved FINRA Rule 2111 (Suitability), which became effective on July 9, 2012. In May 2012, FINRA issued Regulatory Notice 12-25, which provides guidance on the rule in a “frequently asked questions” (FAQ) format. This Notice addresses two issues discussed in Regulatory Notice 12-25: the scope of the terms “customer” and “investment strategy.” In addition, FINRA has created a suitability Web page that, among other things, will locate in one place questions and answers regarding FINRA Rule 2111.

Questions regarding this Notice should be directed to:

  • James S. Wrona, Vice President and Associate General Counsel, Office of General Counsel (OGC), at (202) 728-8270; or
  • Matthew E. Vitek, Assistant General Counsel, OGC, at (202) 728-8156.

http://www.finra.org/industry/regulation/notices/2012/p197436

 

Their research is NOT your research.

Hi All:

So you found an article that you want to send to your customers. First, you should submit it to your Compliance Department with its intended use for approval. Once approved, you must give credit for the article to its publisher and author along with the publication date. You cannot claim the article as your “own research” as this individual soon found out:

X (CRD #123456, Registered Representative, Yourtown, NJ) submitted
a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended
from association with any FINRA member in any capacity for four months. The fine must
be paid either immediately upon X’s reassociation with a FINRA member firm
following his suspension, or prior to the filing of any application or request for relief from
any statutory disqualification, whichever is earlier. Without admitting or denying the
findings, X consented to the described sanctions and to the entry of findings that
he copied previously published articles that addressed economic and financial issues,
and sent the articles to firm customers under his own name while representing that the
articles were his own research and commentary. The findings stated that X had not
obtained firm review or approval for the articles prior to mailing them to the customers.
In fact, X knew that the firm would not have approved the mailing of any of the
articles to customers because the content of the articles was contrary to the firm’s research.
The findings also stated that when the firm confronted him, X denied that he had
plagiarized the articles he had sent to customers until the firm presented X with
copies of the original articles.”