Monday, January 26, 2015

Good News - FINRA Chief Says FINRA Won't Be Piling On.

In discussing the state of FINRA enforcement's activities, FINRA Enforcement Director Brad Bennett said he will not pursue a violator if the Securities and Exchange Commission or state regulators are going after the same individuals and the same firms for the same acts.

 “If there is no reason for us to be in a case, we won’t be there just to collect fines,” said Bennett.

We will have to wait and see how this pans out. 

For more information, go to Finra Enforcement Chief: Smaller Ponzi Schemes The Norm Post Meltdown

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including SEC and FINRA investigations, insider trading cases, securities arbitrations and class actions, nationwide. For more information call 212-509-6544 or send an email.

Thursday, January 22, 2015

Investor Alert - Owen Li crashes Canarsie Capital in New York

Owen Li, the manager of Canarsie Capital has apparently lost nearly 100 million dollars in what he calls overzealous investments, which caused devastating losses.

Fund managers who invest the funds assets in an inappropriate manner are liable to their investors for their losses. We are reviewing these events for possible claims by investors in Canarsie Capital. If you were an investor in the fund, please contact our office at 212-509-6544.
 My only hope is that you understand that I acted in an attempt—however misguided—to generate higher returns for the fund and its investors. But even so, I acted overzealously, causing you devastating losses for which there is no excuse
For more information, go to Manager 'truly sorry' for blowing up hedge fund

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including SEC and FINRA investigations, insider trading cases, securities arbitrations and class actions, nationwide. For more information call 212-509-6544 or send an email.

Tuesday, January 20, 2015

Failing to Reporting Customer Complaints

FINRA rules require firms, and brokers, to report certain customer complaints on the broker's Form U-4 within 30 days of receipt of the complaint. FINRA's requirements for complaint reporting are extremely broad, and quite frankly, unfair. While FINRA's reporting requirements need to be changed, they also need to be followed.

The details of the requirement have changed over the years, but today, if a broker's customer files a sales practice complaint, in writing, or an arbitration or lawsuit, and alleges damages of  $5,000 or more or alleges forgery, theft, misappropriation or conversion of funds or securities, the complaint must be reported on Form U-4 for at least two years. The disclosure questions have become convoluted over the years as FINRA expands the universe of reportable complaints, but are detailed in Item 14 on Form U-4.

This is true even if the broker is not named on the complaint. Because customer attorneys decided it was clever not to name individual brokers in FINRA arbitrations, in the hopes of causing a rift between broker and firm, FINRA decided that if the firm can identify the broker (and it almost always can do so), the complaint or arbitration is reportable on the brokers U-4 - even though he was not sued.

Failing to file a required amendment can result in fines of up to $25,000 and a 30 day suspension - for the broker as well as the firm. It is FINRA"s position that each registered individual has the responsibility to keep his U-4 current and accurate, regardless of what his firm does or says. Brokers are still responsible for accurate filings, even if the firm gives them incorrect information regarding a disclosure.

Firms are also responsible, although sometimes the sanction is not as significant as it might be. Take the recent fine against Merrill Lynch. According to FINRA, Merrill took a year to report allegations that one of its financial advisers was siphoning money from client accounts. Finra fined Merrill $175,000 for this falure. The problem is that because the allegations went unreported, the broker was hired at another firm, and allegedly continued his thefts at the new firm.

If this failure to report had been at a small firm, the fine would have been more significant to the firm than this fine was to Merrill. And you can be sure that an individual, either the President, the CCO or the registration manager would have been named.

Not so when you are dealing with a large firm. 

For more information, go to Finra Fines Merrill Lynch Over Delay in Reporting Allegations Against Adviser - NASDAQ.com

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The attorneys at Sallah Astarita & Cox include seasoned securities regulatory attorneys, with decades of experience in SEC and FINRA regulatory and compliance regulations. For more information call 212-509-6544 or send an email.

Friday, January 16, 2015

Swiss Franc Decision Leads to Massive Forex Losses

On January 15, 2015, the Swiss National Bank unexpectedly ended its three-year policy of maintaining a Swiss franc that was weaker than 1.20 euro.

The effect of this decision on currency pairs containing either the Swiss Franc or the Euro was immediate and drastic.

Investors in those currency pairs have suffered massive losses, since numerous Forex pairs contain either the Euro or the Swiss Franc and the effect of this decision may be felt by tens of thousands individuals, if not more.

 We are currently investigating claims related to this unexpected and monumental decision. If you have suffered losses in forex pairs containing either the Euro or the Swiss Franc, such as USDCHF, EURCHF, GBPCHF or EURUSD please contact Sallah Astarita & Cox,  at 212-509-6544 or email our office


Friday, January 9, 2015

Morgan Stanley Client Info Breached - by an employee?

Morgan Stanley Breach: Advisor Downloaded Client Data From Across the Co

 

Morgan Stanley Breach: Advisor Downloaded Client Data From Across the Country | Financial Planning

--- The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Wednesday, January 7, 2015

FINRA Releases 2015 Regulatory and Exam Priorities Letter

The Financial Industry Regulatory Authority (FINRA) today released its 2015 Regulatory and Examination Priorities letter highlighting significant risks and issues that, if not properly addressed, could adversely affect investors and market integrity.

This year's letter, focuses on key sales practice, financial and operational, and market integrity matters, and identifies challenges in five key areas that should be addressed to get ahead of the concerns raised in the letter.

Briefly stated, some of the more important areas are:

  • Products, including Interest Rate Sensitive Securities, Variable Annuities, Alternative Mutual Funds, Non-Traded Real Estate Investment Trusts (REITs), Exchange-Traded Products (ETPs) Tracking Alternatively Weighted Indices, Structured Retail Products (SRPs), and Securities-Backed Lines of Credit (SBLOCs)
  • Supervision Rules - FINRA’s new supervision rules (FINRA Rules 3110, 3120, 3150 and 3170) became effective on December 1, 2014. These new rules modify requirements relating to, among other things: (1) supervising offices of supervisory jurisdiction and inspecting non-branch offices; (2) managing conflicts of interest in a firm’s supervisory system; (3) performing risk-based review of correspondence and internal communications; (4) carrying out risk-based review of investment banking and securities transactions; (5) monitoring for insider trading, conducting internal investigations and reporting related information to FINRA; and (6) testing and verifying supervisory control procedures. 
  • Individual Retirement Account (IRA) Rollovers (and Other “Wealth Events”) - FINRA is focused on firms’ controls around the handling of wealth events in investors’ lives. Wealth events refer to those situations where an investor faces the decision about what to do with a large amount of money arising from an inheritance, life insurance payout, sale of a business or other major asset, divorce settlement or an IRA rollover, among other events.
  • Excessive Trading and Concentration Controls - FINRA has observed shortcomings in firms’ supervision of quantitative suitability and concentration, for example, through the failure to supervise for compliance with issuer concentration guidelines.
  • Private Placements - Private placements continue to raise concerns and will be an area of focus in 2015. Broker dealers participate in private offerings in a number of capacities, and common concerns across these capacities include inadequate due diligence and suitability analysis. 
  • High-Risk and Recidivist Brokers - FINRA continues to claim that certain "high risk brokers cause  risk to investors.  FINRA devotes substantial attention to brokers that it's staff members believe pose greater risk to the investing public. Whether this is a correct assumption or not, FINRA is expanding its use of data mining, analytics, specially targeted examinations, and expedited investigations and enforcement actions.
  •  Sales Charge Discounts and Waivers - FINRA claims that in some instances customers do not receive the volume discounts (breakpoints) or sales charge waivers to which they are entitled when purchasing products like non-traded REITs, Unit Investment Trusts, Business Development Corporations and mutual funds. (Not mentioned is the situation where a customer receives a waiver that FINRA believes he was not entitled to receive, and brings a proceeding against the broker. FINRA brought such a case against one of my clients, and lost after a hearing. Maybe that is why they are not mentioning it?)
  • Senior Investors - FINRA examiners will continue to review communications with seniors; the suitability of investment recommendations made to seniors, including with respect to the products discussed above; the training of registered representatives to handle senior-specific issues; and the supervision firms have in place to protect seniors. 

There are additional areas that will be targeted and I urge you to review the entire letter carefully. If you need assistance in reviewing your policies and procedures, before FINRA comes knocking, give me a call - 212-509-6544

FINRA Releases 2015 Regulatory and Exam Priorities Letter

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Tuesday, January 6, 2015

Do financial advisors practice what they preach? - New Hampshire Business Review - December 26 2014

I have been representing financial advisers in all aspects of their practices for decades. While they are all well versed at assisting their clients, most fall short in planning for their own future.

In this highly regulated industry, advisers need to plan and carefully consider what happens to their practice when they retire or become ill. Retirement planning through partnership agreements and other agreements can provide an income stream to an advisor once he decides to retire, but all of these mechanisms require advanced planning.

The New Year is a perfect time to review your succession planning. Send me an email and let's  see how we can help you.

 Financial advisors practice what they preach? - New Hampshire Business Review - December 26 2014