Blog by Bill Singer WEEK IN REVIEW

May 7, 2016

Mom, Sister-In-Law, Two Brothers, And Stock Proceeds

In celebration of this Sunday's Mother's Day, the Blog presents a recent FINRA arbitration involving a maternal matter. Among the cast of characters are a mother, her two sons, and a sister-in-law; and, just to make things interesting, let's toss in the proceeds from the redemption of mom's stock.  Nothing like a chunk of change disputed among siblings to set off a round of internecine warfare. READ

Today's featured regulatory case comes to the Blog from the Securities and Exchange Commission. The analysis is admittedly somewhat superficial because the issues are, at best, still in flux and our focus is less on the nuts-and-bolts of the underlying allegations than on the procedural posture of the matter. Pointedly, we got a pro se Respondent who is representing himself against the full brunt of the federal regulator. Likely licking its chops, the SEC's Division of Enforcement feels like it has a classic open-and-shut case in which the facts pretty much speak for themselves in what looks like an undisputed fashion. Given that air of certainty, Enforcement sought the dreaded Summary Disposition. Apparently, Enforcement's cockiness was not without some validity because the Administrative Law Judge granted the motion. At this point, even armed with high-priced regulatory counsel, many respondents are simply going down in flames on their appeal to the full commission -- and handling such an appeal on your own bereft of lawyers, well, what can I say?  Of course, as that sage securities regulator Forrest Gump so aptly noted: "Mama always said life was like a box of chocolates. You never know what you're gonna get." READ

In litigation, timing is often everything. If you file your claims early, you may benefit from a whole host of beneficial factors. The respondent or defendant may be more apt to settle your case and hope to keep a lid on future claims. If you file during troubled times -- say in the midst of the Great Recession -- you may be able to take advantage of the climate of ill will towards Wall Street. On the other hand, the moving hands of the clock can also be your enemy. A few ticks of the clock later and a court has ruled against another plaintiff, who had claims very similar to yours. You turn down a settlement and months later, after trial, you open your mail and read about a panel's dismissal of your case or an award far less than what you were previously offered.  Consider this recent FINRA customer arbitration against David Lerner Associates. READ

On May 3, 2016, the Securities and Exchange Commission ("SEC") filed what can only be described as a fascinating civil Complaint in the United States District Court for the Eastern District of New York ("EDNY"). You're going to see references to "burner' phones and kickbacks and Fox Business News and . . . well,  you know, it's almost like a fast-paced action film. READ the FULL TEXT Complaint: Securities and Exchange Commission, Plaintiff, v. Richard St. Julien,Jared Mitchell, Christopher F. Castaldo, Louis F. Petrossi, Herschel C. (A/K/A Tres) Knippa, Richard L. Brown, Gerald J. (A/K/A Gerry) Cocuzzo, Naveed A. (A/K/A Nick) Khan, Maroof Miyana, And Pranav V. Patel, Defendants (Complaint, 16-CV-2193, EDNY, May 3, 2016). READ

Julius Caesar famously said "Veni, Vidi, Vici": I came, I saw, I conquered. Less famously quoted is the lament of many registered representatives: I came, I left, and I got trashed by my former employer. Yeah, you're right, that latter phrasing isn't the stuff of a quotation for the ages. Some of those who bewail their fate after departing from a former employer have no one to blame but themselves; but others clearly seem to have gotten caught up in the machinery of Wall Street that can grind stockbrokers into chopped meat. Regardless of where your sympathies lie, today's Blog presents a recent battle between Morgan Stanley Smith Barney and one of its former registered reps who departed for the purportedly sunnier climes of LPL. The manner of his departure is the grist for the FINRA Arbitration mill. READ

As the song asks: How can I be sure? In a world that's constantly changing, how can I be sure, where I stand with you? Much the same is often asked by me and many members of the FINRA community when it comes to the self-regulator. We don't always understand what FINRA wants from us. We don't always understand what FINRA says or means. As a recent FINRA regulatory settlement shows, sometimes it's the regulator's fault (and, okay, to be fair, it's often the fault of wayward firms and inventive scamsters). If only Ed Sullivan was still alive and he could have all the regulators and the regulated appear on his Sunday night show and we could wear really brightly colored, shiny outfits with dancers in the background and all sing together and remain in tune. READ