Blog by Bill Singer Esq WEEK IN REVIEW

December 9, 2017

Widow Lacks Standing In FINRA Arbitration Involving Husband's IRA

It's another day in the Compliance Department on Wall Street and the mail has just arrived. We got a few letters that are clearly coming from unhappy campers. Time to get out the old rubber stamp and mark them "RCVD" and enter the data into the online "Customer Complaint" file. Next, we notify the registered rep involved. Next, we arrange to amend the rep's Form U4 and to notify FINRA of the regulatory disclosable event. Ho hum . . . stamp . . . type . . . send. That's the compliance assembly line. The problem is whether all that stamping and processing is going on a tad too quickly and without someone asking whether the correspondence contains a "grievance" from a "customer." Why do those questions matter? Consider today's featured FINRA arbitration. READ

The FINRA Auction Market For Regulatory Fines And Suspensions

At first blush, today's Blog presents two somewhat mundane FINRA regulatory settlements. Upon further examination, our publisher Bill Singer, Esq. sees these two settlements as examples of a troubling trend in Wall Street regulation. As Bill would explain, imagine that we're on a hypothetical "Main Street" and we have two cars both parked at expired meters. When the cop on the beat comes upon both vehicles, one has been at an expired meter for one-hour beyond its time and the other for 45-minutes. Bottom line: both vehicles haven't fed the meter and both get a ticket. You'd sort of expect that each driver would pay the same fine -- let's say $100. How would you feel if, after negotiations with a City traffic cop, one driver paid $75 and the other paid $100? To add to that hypothetical, it turns out that both drivers have $1,000 in unpaid parking tickets but one driver's license is suspended for 30 days and the other's for 45 days.  READ

Feds Halt Seinfeld Bottle Deposit Scam

Let me take you back to 1996. To the Seinfeld show. To what was known then -- and now lives on in legend -- as the two-part "The Bottle Deposit" episode.  Part One opens with Peterman arranging to have Elaine bid on John F. Kennedy's golf clubs and moves on to involve Jerry needing to have his car repaired. More importantly for Seinfeld fans, the episode involves a debate between Newman and Kramer as to whether you can arbitrage the New York State five-cents-bottle-deposit-refund by tendering cans and bottles in Michigan, which offers ten cents per item. Kramer explains that it's an old strategy (one that he tried but failed at) and says that the flaw is in the transportation costs, which cancel out the extra nickel of profit. Newman can't get the idea out of his head and realizes that the heavy flow of mail for the upcoming Mother's Day holiday requires sorting in Saginaw, Michigan. Why Saginaw? Hey, it's Seinfeld and you just have to accept the idiocy.  In any event, Newman, an employee of the United States Postal Service, arranges to drive a "spillover mail" truck because he figures there will be excess capacity -- which will allow him to transport his cache of empty cans and bottles for free. It is the loophole that many have searched for but failed to find. In Part Two, while driving to Michigan, Kramer and Newman spot Jerry's supposedly stolen car (a long story starting in Part One and not one I'm going into here). Suffice it to say that Kramer and Newman are now caught in an existential struggle over whether to drive straight on to Saginaw and cash in their booty of cans and bottles, or, in the alternative, to follow Jerry's stolen car as it heads for Ohio. Alas, as they chase after Jerry's car, the dynamic duo toss empty cans and bottles overboard in order to lighten their load and to gain speed -- all of which ends with Kramer dumping Newman. As with so many of Kramer's and Newman's schemes, this one ends in catastrophe.

What, you might rightly ask, do the Seinfeld "The Bottle Deposit" episodes have to do with the legal, regulatory, and compliance focus of the highly-regarded and ever-so-serious Blog? Great question. Read on for the equally wonderful answer. Enjoy the video. READ

Stockbrokers Succession Plan Grapples With Mine, Ours, and Yours

With Wall Street's Baby Boomers heading into retirement and new blood angling to take over the departing reps' accounts, today's featured FINRA disciplinary settlement offers some guidance concerning what appears to be a succession plan that arranged to migrate shared accounts to the exclusive oversight of the eventual successor rep. As with such hand-offs of business from the former to the new guy, not everything was anticipated and it seems that no one fully thought through how the former rep would stay connected with customers during the transition. You got "my" business, you got "our" business, and you got "your" business and all those different states came crashing together in a problematic fashion. By way of comparison, consider how the New York Giants football team has to decide this weekend whether Eli Manning will be the starting QB for the rest of the season and who will be the General Manager and Coach.  Some things you plan for, some things you have to deal with on the run, and some things you have to fudge. READ

Bleak Marshall Family Drama Hits FINRA Arbitration

Today's Blog comes upon yet another bleak bit of ongoing probate litigation, now in the form of a FINRA arbitration, swirling around the heirs of J. Howard Marshall II, who, you may recall, was a so-called oil tycoon who died in 1995 at age 90 after having married, you may recall, a 26-year-old  stripper named Vickie Lynn Hogan, who, you may recall, was also known as Anna Nicole Smith, who, you may recall, was a Playboy playmate, who, you may recall, died of a drug overdose in 2007 and, who, you may recall, was not named as a beneficiary in her husband's will, which her estate is contesting on behalf of her daughter notwithstanding that the United States Supreme Court has already rejected the claims.  Also, you may recall that J. Howard Marshall II's son E. Pierce Marshall died in 2005 and that Pierce's widow Elaine Marshall is often listed among the wealthiest women in the United States. Preston Marshall, you may recall, was Pierce and Elaine's son, and, you may recall, he filed a temporary restraining order against his mom. You may also recalled that a Louisiana state probate court judge got so fed up with the ongoing lawsuits that he famously said "I'm honestly -- I'm trying to get recused. Because I can't -- it is not fair to me, my staff, my life to have to deal with you people who do not want to resolve this cases. READ