May 4, 2019
In today's blog we have a public customer Claimant who says he saw one of the respondents presenting an investment seminar at a restaurant in 2015. Then again, the customer says that this respondent may have just been present and not an actual presenter. Then there was another respondent, who was supposedly conducting the restaurant seminar. The customer also argued that the respondent who may have been presenting the seminar should have corrected misrepresentations made by the respondent conducting the seminar. Presenter. Conductor. Presenting. Just Present. Oh my, this is certainly going to be a mess of a FINRA arbitration.
During an interview with Andrew Ross Sorkin last year, an audience member asked SEC Chairman Jay Clayton why a cryptosecurity (which is only transferable on a blockchain) needs a transfer agent. Essentially, Clayton's answer was because we need to blame someone for an illegal transfer. Although that answer is consistent with modern ideas of human responsibility, it betrayed a deep ignorance of how blockchain-enabled securities actually work. Until we do a better job reconciling the reality of blockchain technology with our traditional notions of human agency, we won't achieve a coherent theory of how to regulate cryptosecurities.
Unless you do Wall Street regulatory law for a living, you may not appreciate the dramatic -- frankly, historic -- nature of a just-published Opinion by the United States Court of Appeals for the District of Columbia Circuit in Robare Group, Ltd. v. SEC. All serious industry professionals should read the history of this SEC regulatory case from its inception through the deliberations of the federal circuit court -- and continue to follow this matter as it is remanded back to the SEC. Among the fascinating issues in dispute is whether an RIA is justified in relying upon the compliance advice of a seemingly reputable, independent consulting organization. Is it enough in 2019 for human beings to do their very, very best in order to comply with all of Wall Street's rules and regulations -- or, as the SEC asserts, even good faith may still involve sanctionable negligence. It's not that you knew but that you should have. Beyond the substantive issues on appeal, we witness, yet again, the dubious Wall Street regulatory practice of trying a case before an SEC administrative law judge, who renders a so-called "initial" decision, which is subsequently over-turned by the SEC's Chair and Commissioners, who did not sit in on the regulatory hearing, did not observe the witnesses' demeanor, and likely have less familiarity with the details of the underlying facts than the ALJ who is being reversed.
A FINRA Information Notice warns about increasing website attacks targeting the FINRA member community. Although not a new threat, efforts to hijack and compromise the sites of financial firms is a serious problem that has not shown any signs of abatement. The Notice offers some excellent steps that you can take to protect your online content.
Today's updated blog features music videos by Carrie Underwood, Destiny's Child, and the Hollies. What kind of lawsuit, you may wonder, would prompt such an oddball array of tunes? Well, howsabaout I tease you with the fact that we got a wife suing Safra Securities LLC because she claims the firm's bank officer had an affair with her husband! Oh . . . so now you're intrigued? Oh . . . so now, maybe, just maybe, you're gonna make some time to read today's article? Oh . . . yeah, sure, it's only because there's an important legal-regulatory-compliance-jurisdictional issue involved and you're such a serious person. And why are you smiling and laughing when you say "jursidictional" -- as if you'd find "respondeat superior" anywhere near as funny?