Blog by Bill Singer WEEK IN REVIEW

December 12, 2015

Every so often, someone finds a new way to do an old thing. Mind you, that's not necessarily a prescription for success in life because a lot of bad guys put their minds toward finding ways over, under, and around the law but, regardless, it's nice to know that the entrepreneurial spirit is still alive. Consider a recent regulatory settlement involving an enterprising fellow who found a way to cash the same paycheck twice! READ

Artwork Purchases And Charitable Donations Cited In FINRA Settlement

If nothing else, Wall Street's reputation over the years has been that of a high-end frat house for overpaid and under-regulated boys. The excesses of the industry's wunderkinder is now the stuff of movies and legend. Drugs. Hookers. Boom Boom rooms. Over-the-top Super Bowl parties. Over-the-edge office renovations. Feel free to add your own sordid examples. If you buy into the public relations campaign orchestrated by those in power, you're supposed to believe that Wall Street's days of excess are behind us -- dead and buried with all those pennystock shops on Long Island and in Florida. You're also supposed to believe that the last shovel of dirt was tossed on Wall Street's grave after the Armageddon of the Great Recession. Hey, you know, whatever floats your boat: believe what you want.  A recent FINRA regulatory settlement suggests that we may now be in an era of more refined, how should I politely put it?, "excess." Witness over a half-a-million-bucks in charitable donations. Witness six-figures in art purchases. And then there is FINRA's curious decision to give us the corporate titles of those involved but not their names. READ

To what extent does securities-industry regulator FINRA have jurisdiction over non-securities transactions? A recent disciplinary case found the self-regulatory-organization asserting its jurisdiction over a registered representative who, in his role as an insurance agent, had deposited his customers' insurance premium payments into his personal and business accounts and, thereafter, used said funds for personal/business use. On top of the issue of jurisdiction, we are asked to consider whether the challenged deposits constituted an improper "conversion" by the agent/registered rep notwithstanding that before any lapse had occurred, the premium payments were deposited into the insurance company's bank account. READ how the respondent fared at FINRA and on appeal to the SEC..

Among the most common FINRA intra-industry arbitration matters are those involving attempts by former employers to collect allegedly unpaid balances due on promissory notes, which are often Employee Forgivable Loans or EFLs. When a registered person who has signed off on a promissory note quits or is fired, hostilities may break out if the parting was less than amicable. Among the accusations hurled from angry former employees is that they were "wrongfully terminated" -- and that circumstance is cited in support of the argument that the individual is now relieved of any obligation to repay the contested amounts. In addition to that legal theory, we often come across contentions by besieged former employees that they should not have to repay EFLs (or retention bonuses) because they were defrauded into accepting (or remaining on) the job. Consider a recent FINRA intra-industry arbitration. READ