Blog by Bill Singer WEEK IN REVIEW

July 15, 2017

So what happens to the hundreds of thousands of registered men and women when they drive with a broken taillight on Wall Street? They get pulled over. As they should. What happens next is the problem. On the side of the road, they find themselves in an intimidating setting with several FINRA lawyers, examiners, and investigators and are presented with the choice of bankruptcy by way of pursuing a hearing or career suicide by way of settlement. Talk about a choice of poison. I'm not suggesting, even remotely, that Wall Street's regulators always act without justification. More often than not, the respondents in their cross-hairs are guilty. I concede that point. A broken taillight is a danger, regardless of whether you knew about it. The thing is that some drivers get let off with a warning and an admonition to get it fixed immediately. Other drivers find themselves hauled before a small-town magistrate who doesn't quite like out-of-towners and whose ruling is "pay a $1,000 fine or one-week in jail." Sure, go ahead, call a lawyer. See how well you fare by the time the town magistrate schedules a hearing and subsequently rules against you. Also, there's the matter of the impound fee charged by the judge's nephew at the auto repair shop and the bill for the court costs that will be presented to you by the judge's son-in-law, who happens to be the town's lawyer. Ya wanna appeal that through the state court system? How much justice can you afford?

As I often note, it's just as expensive to defend an innocent client as a guilty one. Does it make sense to incur $40,000 in defense costs when you can settle with FINRA for $5,000? Before you answer that question, factor in that you have a mortgage to pay, a daughter getting married in two months, and a daughter starting her Ivy League college in September. Then ask yourself: Is it worth an additional $35,000 to fight this bull-shit charge or should I just eat the $5,000 fine and get on with my life? READ 

The Blog is no fan of mandatory Wall Street arbitration, as has long been documented on our pages. Regardless of whether it is a public customer or associated person, our publisher Bill Singer, Esq. has argued against forcing litigants to forfeit their right to pursue their grievances before a court and channeling them into a pipeline that feeds business to a handful of so-called alternative dispute resolution forums, most notably that of the Financial Industry Regulatory Authority. As a former arbitration Chair, arbitration panelist, and lawyer representing the industry and public customers, Bill knows that most arbitrations are conducted in a fair manner with dedicated arbitrators -- and that such proceedings are often quicker and cheaper than their courtroom alternatives. The fact that mandatory arbitration may be quicker and cheaper, however, doesn't always mean that slower and more expensive may not yield far fairer results. Ultimately, Bill concedes that the concerns about arbitration may largely be one of perception rather than reality; however, if arbitration is such a reasonable and fair alternative to the court system, then that fact, and that alone, should prompt litigants to voluntarily pursue arbitration.  

Consider a recent FINRA public customer arbitration in which the public customer settled his claims and a registered representative won a recommendation for the expungement of the customer's complaint from her industry record. READ 

Pending before the SEC was an application by Wanger for reentry into the industry. Generally, at the time of requesting the ability to associate with a financial services firm, an applicant would present the name of the proposed employer and detail the proposed supervision under which employment would be pursued. Unfortunately for many folks who have been barred with a right to apply, brokerage firms, advisory firms, and other industry participants aren't typically lining up as a welcoming employer. In part, there is a belief by such firms that they will be tarred by the SEC as "bad boys" for hiring individuals who had previously been barred. Similarly, many potential employers will only make a contingent offer of employment -- which is often predicated with the requirement for the barred individual to first obtain reentry approval before any formal offer will be conveyed. As you may imagine, this regulatory setting tends to place reentry applicants in a frustrating loop that requires them to provide the name of an employer as part of their reentry application but they can't get a commitment from any employer until the SEC first approves their reentry.  In Wanger's situation, the SEC's Bar with the right to apply after one year was imposed on July 2, 2012; and, accordingly, his right to apply for reentry after one year came to life in 2013, which is some four years ago. Now what? READ 

Can you bring a small package of tissues into a FINRA test-taking center? If you take a test in a state that permits you to carry a weapon, will you be able to take your Glock or AR-15 into the center? How much crap should you jam into your pockets before entering a FINRA exam center? These and other fascinating questions will be answered in today's Blog. READ 

Sometimes the Financial Industry Regulatory Authority's approach to regulation seems like an Easter egg hunt. The regulator's idea of what needs to be hidden from public disclosure comes off as a bit of a childish game of hide-and-seek. Readers of the Blog know that publisher Bill Singer, Esq. has written about this aspect of FINRA's published decisions and settlements before -- some might even say ad nauseum. Oh well, nothing like turning our stomachs yet again! READ