BrokeAndBroker.com Blog by Bill Singer, Esq. WEEK IN REVIEW
October 21, 2017
Absurd Unexplained Public Customer FINRA Arbitration Decision http://www.brokeandbroker.com/3630/finra-arbitration-decision/
BrokerAndBroker.com Blog's publisher Bill Singer, Esq. ain't always a popular guy. There are those who view him as an annoying gadfly, a blowhard, and an attention seeker. A lot of that comes from Wall Street interests and industry apologists because Bill isn't shy about criticizing the brokerage community and its regulators when they engage in misconduct -- yeah, you read that right, he also goes after Wall Street's cops. In fairness, Bill also criticizes public customers who fail to do due diligence or choose to believe that's what's too good to be true isn't too good to be true.
In today's blog, Bill takes on the Financial Industry Regulatory Authority for what he views as an idiotic FINRA Arbitration Decision involving the dispute of two public customers against a member firm. Bill is not criticizing the three FINRA arbitrators who signed off on the Decision because they are following the dictates of the FINRA Code of Arbitration. What comes within Bill's cross-hairs is FINRA for its tolerance of a policy of non-disclosure and its contentment with a lackluster approach to quality control over many of its published materials. READ http://www.brokeandbroker.com/3630/finra-arbitration-decision/
Brokerage Customer Says That What Looks Like A Complaint Wasn't So Intended
http://www.brokeandbroker.com/3627/customer-complaint-intent/
You tell me: What constitutes a "Complaint."
Okay, fine, let's go with your definition.
Now, what happens if a brokerage firm customer sends a letter to the firm indicating that he was disappointed in his account's performance? Using your definition of a complaint, is that customer's letter a "Complaint?"
Next, what happens if you are a compliance officer at the brokerage firm and you read the customer's letter questioning his account's performance? Should that compliance officer deem the letter as constituting a reportable customer complaint?
No, don't go anywhere, I got one more twist for you, what happens if the customer says that the letter was never intended to be viewed as a "formal" complaint?
Today's BrokeAndBroker.com Blog tackles the fascinating issue of whether a letter from a customer that seems to be a "complaint," is, in fact, a complaint in light of the customer's renunication of any such intent. READ http://www.brokeandbroker.com/3627/customer-complaint-intent/
Among FINRA's more lucrative fine-generating violations is FINRA Rule 3280: Private Securities Transactions of an Associated Person, or, in industry jargon, the FINRA PST Rule. Contrary to what some might believe, I fully appreciate the motivation for this rule and support some form of restriction on a registered representative's outside securities transactions. The problem for me is not the justification for a PST Rule but the fact that FINRA's version isn't particularly well written. Frankly, that definition isn't much of a definition but, at best, an example of circuitous logic.
During my 35 years on Wall Street in compliance, regulation, and as a lawyer in private practice, I have had many discussions with registered representatives about PST violations. Okay, sure, many of those folks simply didn't give a crap about the prohibition and figured that no one would find out -- and, of course, that gambit didn't play out particularly well. On the other hand, I have spoken to many -- far too many folks -- who simply misunderstood what constituted a "securities transaction" or a "private securities transaction."
John M.E. Saad, a broker-dealer, unlawfully misappropriated his employer's funds on two separate occasions, and then spent the next seven months misleading investigators in an effort to cover up his wrongdoing. After a lengthy review process, the Securities and Exchange Commission sustained a decision of the Financial Industry Regulatory Authority ("FINRA") permanently barring Saad from membership and from working with any of its affiliated members. Saad challenges the Commission's decision as insufficiently attentive to mitigating factors and argues that the permanent bar is impermissibly punitive rather than remedial. We hold that the Commission reasonably grounded its decision in the record, which extensively evidenced Saad's acts of misappropriation, his prolonged efforts to cover his tracks through falsehoods, and his repeated and deliberate obstruction of investigators. With respect to the permanent bar on Saad's registration with FINRA and affiliation with its members, the court remands for the Commission to determine in the first instance whether Kokesh v. SEC, 137 S. Ct. 1635 (2017), has any bearing on Saad's case. Accordingly, Saad's petition for review is denied in part and remanded to the Commission in part.