Blog by Bill Singer, Esq. WEEK IN REVIEW

November 4, 2017

The newly launched "Securities Industry Commentator" feed is now online. Daily content curated by veteran securities industry lawyer Bill Singer, Esq.

NYC October 31, 2017 Terror Attack
In Memory of the Victims 
In Honor of the Survivors

Brokerage firms get sued and, sometimes, the lawsuit is covered by an insurance policy. When the ensuing settlement or award becomes a liability on the firm's books, there is often a belief that the anticipated insurance payment may be treated as an allowable assets. As far as Wall Street accounting goes, the Devil is often in the details. All of which explains why lawyers love the billable hour!

In today's featured Blog, our publisher Bill Singer, Esq. presents a recent FINRA AWC involving the issue of how to recognize an anticipated insurance company payment for Net Capital purposes. It may strike you at first blush as a bit of Wall Street arcana. At second blush, you may be catatonic after delving into this bit of bookkeeping. At third blush, we may be trying to revive you with paddles. If you hang in there to the end of the article, however, you may find a truly intriguing puzzle. What does FINRA mean by the term "relevant"  . . . as in disclosing one of its member firm's "relevant disciplinary history"? 

All of which prompts us to ask, yet again, whether there is any quality control at FINRA when it comes to reading and fact-checking its published materials. Assuming that this "relevant" issue was just the byproduct of a lapse of review, okay -- it happens and even the pages of BrokeAndBroker have similar misses. On the other hand, if  someone is fact-checking FINRA's published materials and today's AWC disclosures comport with the self-regulatory-organization's policy, then that raises some troubling questions. 

Was That Customer Email A Discussion, Grievance, Or Complaint? Blog's publisher Bill Singer, Esq. has long criticized the Financial Industry Regulatory Authority's expungement protocol as unfair, burdensome, expensive, and moronic. Clearly, Bill doesn't feel strongly about the issue. Given that Bill represents both public customers and the industry in his law practice, he recognizes that FINRA has implemented a process that poses danger to the investing public by allowing what has taken on the nature of a cottage-industry for the mass production of expungements. On the other hand, Bill also sees that the need for many expungements is prompted by the lack of clarity and guidance in FINRA's rulebook.

As today's featured FINRA expungement arbitration case demonstrates, the industry's self-regulatory-organization is in denial. It persists in failing to comprehend the confusion caused by its vague proscriptions and reliance upon so-called notions of reasonableness. In the end, regulation is rarely, if ever, about reasonableness. Frankly, it's not supposed to be. It's supposed to be about protecting the investing public and ensuring the integrity of the financial services industry. You can't always accomplish both of those goals by being reasonable. Notwithstanding such challenges, regulation should always be about drawing bright, well-defined lines, and, thereafter, providing prompt, responsive, and fair answers to questions seeking interpretation of the rules. 

Too much of FINRA's rulebook is indecipherable. Too much of what constitutes FINRA's role as an arbiter is cynically conducted via voicemail, non-responsive emails, and referrals to generic online explanations. FINRA member firms and their associated persons ought not be required to engage in civil disobedience in order to test the meaning of a vague rule.

Just say no isn't an effective regulatory or compliance regimen. Just say no is a coward's response to answering tough questions. 


Paige Pierce For 2017 FINRA NAC Small Firm Member

As a founder of the NASD / FINRA Dissident Movement and a 35-year industry veteran, I support Paige Pierce's candidacy for the 2017 FINRA Small Firm NAC Member and urge all FINRA Small Firm Executive Representatives to cast a ballot in support of her candidacy. With over 25 years of industry experience, Paige Pierce is in a unique position to effectively serve on the NAC. During her impressive career, she has gained the perspective necessary to understand the significant financial, compliance and regulatory challenges facing the industry's firms and employees.  READ

FINRA Settlement Is A Matter Of Time And Price

Today's featured FINRA settlement involves yet another dispute about unauthorized discretion and the proper use of Time & Price discretion. Additionally, Blog's publisher Bill Singer, Esq. is troubled by an emerging trend of FINRA AWC Respondents submitting Corrective Action Statements. As Bill explains in his commentary at the end of the article, such statements are gratuitous and not required or mandated as part of the formal AWC. Sure, such recitations are often well intentioned but the road to Hell is paved with good intentions. READ

$3 Million Awarded In UBS FINRA Employment Dispute

So-called "wrongful termination" cases often involve allegations of defamation and frequently prompt counter-claims, cross-claims and the back-and-forth of dueling motions. By the time these disputes come to trial/hearing, the puddle of bad blood has often expanded to that of an ocean. In today's Blog's featured intra-industry FINRA arbitration, the former employee Claimant sought between roughly $64 million to $97 million in damages. That's quite a range. Those are breathtaking amounts. All of which makes for a fascinating knock-down-drag-out fight between the employee and UBS. READ