December 1, 2018
Today's featured FINRA regulatory settlement involves a stockbroker charged with multiple transgressions involving hidden electronic communications, a customer complaint, and a settlement. All of which becomes a game of stockbroker hides and FINRA seeks -- and then FINRA fines and suspends. I would not recommend the home version of this game to anyone. Be that as it may, when you're done digesting this matter, you're likely to figure that either FINRA went overboard in loading up the underlying fact pattern in a way that made the case seem far worse than it really was; or, in the alternative, the respondent was represented by a very savvy industry lawyer.
Sure, coin exchanges have things that look like order books and price reporting mechanisms, and coin dealers provide a place where people can buy coins. But they aren't the same as stock exchanges or broker-dealers, because beyond their common interest in equity, stocks and cryptocoins work differently. To apply stock exchange logic to a coin exchange is like saying that an 18th-century flintlock and a modern semi-automatic assault rifle are the same because both shoot projectiles. Okay, maybe that's not a good analogy. But you get my point.
In today's blog, we come across a relatively short FINRA Arbitration Decision that proves how interesting cases can sometimes come in small packages. By way of a tease but without a spoiler, imagine that Stockbroker X and Stockbroker Y agree to a 50/50 split of a commission on a joint-production account. Just before that split is to occur, however, Stockbroker Y exits the picture and can no longer share in the commission. Does Stockbroker X have the right to retain 100% of that commission?
Financial exploitation of seniors is a growing concern as the massive Baby Boomer population and their parents age. Lurid and heart-wrenching tales of elder fraud appear daily in the press, and have prompted new laws and regulations. As we enforce the protections, we come across situations where a senior citizen's right to privacy may need to be lessened or sacrificed -- is that okay and who gets to make that decision? Similarly, in our rush to protect the vulnerable elderly, we must be vigilant against providing glimpses of confidential financial information to predators, who may be posing as the elderly account-holder, or to seemingly concerned family members, who, in reality, are in desperate need of cash. A recent FINRA AWC doesn't involve the issues noted above but it does provide us with a moment in time for us to stop, pause, and ask some provocative questions about what's going on and whether we need to reconsider (or better consider) the new policies and protocols.
When it comes to FINRA public customer arbitrations, you sort of expect that the respondent brokerage firm and its registered representatives will put up a spirited defense. The thing with "spirited," however, is that it sometimes takes on the hue of hardball -- replete with excessive motions, foot draggin', and whatever tricks a given lawyer has in his or her bag. Similarly, you sort of expect that the claimant customer will be eager to get a hearing date, and will show up on time and at the appointed place. In a recent FINRA arbitration, we are confronted with the oddity of no-show claimants and their lawyer. Even more puzzling, when a beleaguered FINRA arbitrator sanctioned those parties for their failures to appear, the beneficiary stockbroker pulled another vanishing act of his own. It's all very bizarre. Some might say comical. Others may say infuriating.