Blog by Bill Singer, Esq. WEEK IN REVIEW

September 23, 2017

Lawyers Cast Aspersions In Nasty FINRA Arbitration Involving Divorced Couple

On one side of today's featured FINRA customer arbitration we got an ex-wife. On the other side, we got the ex-husband and what looks like two brokerage firms. On that other side with the ex-husband, only one of the three named respondents submits an Answer. We got aspersions that are cast. We got a pension account in which the ex-husband, who may not have been an ex- at the time cited, engaged in trades which the now ex-wife doesn't seem to think were properly made. As you might sense, this is a mess of a case involving allegations of fraud, breach, negligence, unsuitability and a few other claims to boot. Also turns out that things get a bit testy and nasty between two of the parties' lawyers. READ

TD Ameritrade Acquires Scottrade Subject To Outdated NASD Rules

My experience is that when a FINRA Small Firm indicates its interest in buying another small FINRA member firm or in opening up another measly branch office, why, gee, the zealous regulators at FINRA might take weeks and months just to vet the whole small-firm-buys-another-small-firm-or-opens-another-branch. Don't take my word for it. Ask owners of broker-dealers in FINRA's Small Firm community about their experience in obtaining "timely" reviews and approvals to expand. You're not going to hear a lot of glowing stories. Of course, a lot of folks might not say anything out of fear of reprisal but, hey, that's just an example of how warm and fuzzy self regulation is.

FINRA's continuing membership process is a frequent bone of contention among smaller firms. Just take a look at all the requirements in the applicable NASD Rule 1017: Application for Approval of Change in Ownership, Control, or Business Operations.

Oops . . . sorry . . . I must have made a mistake. "NASD" Rule 1017? Why there hasn't been an NASD since 2007 when FINRA came into existence. Lemme check that citation. 

What the hell?  

All of the seminal rules involving approving FINRA member firms' proposed changes in ownership, control, and operations are still subject to an NASD Rule? READ

Wachovia Customer Sues Wells Fargo Over FundSource Losses

Among the most frustrating aspects of practicing law is when you have a client who has been wronged, terribly wronged, but it's just too late to do anything about it. Whether called statutes of repose, eligibility, or limitation, there are laws and rules that impose limits on how long a potential plaintiff/claimant can wait before filing a claim. In particularly egregious cases where a proposed defendant/respondent has intentionally hidden facts and lied as part of a cover-up, some relief may be available in the form of tolling the count-down by which a complaint must be filed; however, there are limits to even that equitable stoppage. In fairness, there is merit in sun-setting the filing of claims because with the passage of too much time, evidence is destroyed and memories impaired. Similarly, in the financial services sector, you don't want to encourage consumers to game the system by holding on to investments in order to see if they pan out and then, years later, allege that those same investments were unauthorized. In the end, lawsuits should be promptly filed so as to ensure due process for all.

In a vacuum, in a perfect world, talk about due process and fairness and equity is appropriate. In the real world, however, we're not all starting out even-steven. Next time you try to open a bank or brokerage account, see what happens if you attempt to cross-out the mandatory arbitration provision. Next time you open a brokerage account, see if they warn you about all the letters, emails, and telephone calls that will bombard you about opening an account at the affiliated bank -- and also see what happens when you open just a banking account and get flooded with solicitation from the affiliated brokerage firm. See what happens when you fail to timely pay a charge or fee for you bank or brokerage account but note how it's just an "oops" when the bank or broker-dealer fail to timely forward your funds to you or "mistakenly" charge you for services. Yeah, it never quite seems to be one-size-fits-all. You fail to pay a $25 charge and it mushrooms up to $250 with late fees and service charges and dings on your credit history. They fail to pay you and you're forced to wait hours on the phone or online, and good luck trying to get to talk to someone at the branch. As today's Blog featured arbitration shows, life on Wall Street ain't always fair, and time doesn't stop just because a large financial services firm isn't playing by the rules. READ

Harbour And Geneos Customers Win FINRA Arbitration Against Stockbroker

Two public customers were angered by the misconduct of their servicing stockbroker and what they perceived to be the negligent oversight of his employers. As is often the case with such unhappiness, the customers sued and their case was adjudicated before a FINRA Arbitration Panel. As Blog publisher Bill Singer, Esq. demonstrates, there is one level of content and context provided in FINRA's Arbitration Decisions, but, if you start asking questions and doing some research, you often find a whole different level of content and context out there in the real world.

Should FINRA's Decisions always disclose everything even remotely relevant to a party's background? Frankly, as nice as that would be, it's just not practical. Is there a reasonable standard by which arbitrators should determine what should and should not be disclosed in their decisions? Again, that's probably an elusive and subjective goal. Reasonable or not, elusive or not, Bill Singer will continue to do what he does best -- the whole agent provocateur thing. In his beloved role of FINRA gadfly, Bill presents us with a seemingly mundane customer arbitration and then delivers some details not set forth in the FINRA Arbitration Decision that will likely widen your eyes and leave your mouth agape. Bill is available for all sorts of parties and functions. Ask for his rates. READ

I often say that if it wasn't for stupidity, I would have nothing to do as a lawyer. Thankfully, there's more than enough stupidity to go around to fully employ me and millions of other lawyers. In a recent FINRA regulatory settlement, we have a case in which not only does a registered rep borrow money from two elderly clients but he also fails to apply the loans as promised and, duh, doesn't repay the debt. 

Frankly, that should be enough misconduct for anyone. Not for our intrepid Respondent. He seems to be a Trekkie who is determined to boldly go where no man has gone before. In the end, however, this voyage is more pathetic than inspiring and comes off as a fairly sad journey. READ