Blog by Bill Singer WEEK IN REVIEW

August 27, 2016

Compliance Is a Sentence, Not a Word

By Elisabeth Miller, Managing Partner, Milava Consulting

For many the word "compliance" represents the practice of following rules. These rules are generated externally and come as edicts from a monolithic regulatory body. As a result, the relationship between the regulator and the complying organization is seen as adversarial; someone is telling you what to do.

What happens when we change our perspective on this relationship? The digitized world of the 21st century has given rise to more threats. View the overseeing regulatory body as an ally. The nature of the relationship will change. It is no longer one of an onerous master, but rather one of a trusted advisor. READ

FINRA Protective Order Addresses Private Confidential Information (PCI)

The Financial Industry Regulatory Authority's ("FINRA's") rules consist of lots of things that a registered representative or member firm can't do subject to the penalty of being named a Respondent in a disciplinary proceeding and, thereafter, subject to the imposition of a fine, suspension, and/or bar. On top of those substantive rules governing the industry's day-to-day conduct, there are procedural rules explaining how the regulator is supposed to conduct its investigations and proceedings, which are set forth in the self-regulatory organization's 9000 Series of rules. Yeah, 9000, as in a 9 with three zeros after it. As in if we're looking up the 9000 Series of rules of any organization, that's sort of warning us that we got a large rulebook.

In a recent FINRA disciplinary proceeding, it became necessary to produce Personal Confidential Information ("PCI"), which is data that is statutorily protected to ensure that individuals are not exposed to identity theft or other misuse. Certain documents involved in that proceeding may have contained social security numbers, taxpayer ID numbers, driver's licenses, state-issued ID cards, passport numbers, and financial account numbers referencing, for example, checking/savings accounts, credit/debit cards, etc. READ

FINRA Arbitration Soccer Match Ends With Penalty Kicks

I'm just not a big soccer fan. I guess it's because the sport often strikes me as a game where 20 players run back and forth for about an hour (with two guys dressed differently standing around in front of a goal) but there's always some hidden extra time added at the end when time was supposed to run out but apparently didn't. Then there's that whole thing when one athlete pretends to be grievously injured and needs to be taken off the field on a stretcher, only to miraculously recover on the sidelines (or even before they get him there) and then runs back into the game. A particularly colorful part of soccer is the waving of all those red and yellow cards and the theatrical remonstrances of those against whom the cards are being waved. One particularly annoying aspect of soccer is the point in time when the clock finally, really, truly runs down to zero and there is either no score or a tied score: All of which renders the whole game as largely meaningless because each team sends a guy to go kick a ball one-and-one with the goalie. 

Frankly, I prefer American sports where players are taken off the field by ambulance; you have double and triple digit scoring; most of the season is meaningless because almost every team gets into the playoffs; and once a year you watch the championship game and consume lots of all-American guacamole and foreign beer (or American beer made by a company owned by foreigners). All of which reminds me of a recent FINRA soccer match . . . oops, I mean FINRA intra-industry arbitration. READ

FINRA Settlement Enters The RIA And BD Jungle

Welcome to the jungle . . . the Wall Street jungle, where herds of stockbrokers and investment advisor representatives are coming into increasing conflict over diminishing territory. The broker-dealer prairie continues to shrink while the registered investment advisor wetlands are drying up. On top of that habitat crisis, corrupt politicians, compromised regulators, and self-interested industry groups are preying upon the most vulnerable. Everyone wants in on the hunt as the fading world of the broker-dealer collides with the unstable world of the RIA. If you read a recent FINRA regulatory settlement, you almost hear Guns N' Roses singing: Welcome to the jungle it gets worse here everydayREAD

I Don't Want To Miss A Thing In Customer's Armageddon FINRA Arbitration

I don't want to miss a thing was a lyric sung by Aerosmith from the 1998 film "Armageddon." The song was pretty decent; the movie, however, was something you could miss, particularly since it's pretty much a re-hash of a number of asteroids-on-the-way-to-destroy-Earth flicks and there is no chemistry between Liv Tyler and Ben Affleck and you knew from the beginning how it was going to turn out when they sent that lame team of drillers onto the asteroid. Ooops . . . I think I'm getting off course here like Bruce Willis and Steve Buscemi did. In any event, consider a recent FINRA arbitration in which a customer complains that her brokerage firm was sort of like an asteroid that hit her planet of investments and destroyed them. Unfortunately the official arbitration Decision is missing so many facts and explanations that we have little idea as to what happened. I suspect that the customer has no idea what hit her too. At least Blog readers get to watch a music video of Aerosmith's hit song at the end of today's article. READ