Blog by Bill Singer Esq WEEK IN REVIEW

March 24, 2018

Merrill Lynch Wins Puerto Rico Bond Arbitration Via Counterclaim ( Blog)
Frequent readers of the Blog know that our publisher Bill Singer, Esq. is a long-suffering critic of FINRA Arbitration. In particular, Bill frequently derides what he calls the "lack of content and context" in the arbitration forum's published decisions. Notwithstanding that he is often dismissed as a gadfly, a nit-picker, or a pain in the ass, Bill is unapologetic for shining an unwelcome light upon the inequities of mandatory consumer and industry arbitration, and upon the woeful state of FINRA's published/public disclosures. That being said, today, all the angels are singing and heaven is a happy place because Bill absolutely loves a recently published FINRA Arbitration Decision involving the thorny issue of an angry public customer's investments in unpopular Puerto Rican debt.

2 Wrongs Don't Add Up To 1 Right In FINRA Regulatory Settlement ( Blog)
Imagine we got six customers with eight brokerage accounts. Now, imagine that for some four years we got a stockbroker who engages in 1,290 purportedly unauthorized transactions in those customers' accounts. Let's have a bit of fun with the math. To annualize the transactions, let's divide 1,290 by 4 and come up with 3,225. Next, let's divide 3,225 by 8 accounts and get about 40. Finally, let's divide 40 by 12 to see how that breaks down per month, which is about 3.4 trades a month per account. 

So . . . each and every month for about 48 months, your stockbroker is executing between 3 and 4 unauthorized trades in one of your brokerage accounts. I have a brokerage account. I would know if there were 3 to 4 unauthorized trades in that account. I would be screaming bloody murder and you can sure as hell bet that no one is going to enter that many trades in my accounts without my consent over a four-year period. 

On the other hand, there are a lot of crooks and con artists out there. Sometimes they dupe customers into believing that what looks like a trade isn't or what looks like a buy was a back-office error. Then you have customers with medical or mental conditions and they just can't follow their accounts. In the end, it often comes down to whether an apparent fraud is intentional or inadvertent, whether something was a misunderstanding or willful failure to follow instructions, whether there was a miscommunication or knowing disregard. 

In a recent FINRA regulatory settlement, it sure as hell seems like a stockbroker stepped over the line repeatedly and violated the rules. In contrast, FINRA's published AWC settlement leaves out a lot of content and context and comes off as a somewhat careless attempt to wrap things up and just move on. Let's have a bit of fun with the math again. We add up two wrongs and . . . hmm . . . I still can't get one right.
When things fall apart on Wall Street, they can get nasty. In a recent example, we have a dipsute about a Branch Office Agreement, which prompts, in part, claims of defamation, fraud, tortious interference with business relations, bad faith, and failure to provide services. There's more than enough finger-pointing to go around for both sides of the lawsuit caption.

BREAKING NEWS: Supreme Court Says State Courts May Hear Securities Class Actions ( Blog)
CYAN, INC. v. BEAVER COUNTY EMPLOYEES RETIREMENT FUND (583 U.S. __ 2018; March 20, 2018; KAGAN, J., delivered the opinion for a unanimous Court) 

FINRA Arbitrators Deem CRD / U5 Disclosures Defamatory
( Blog)
It's one of the most common questions asked of industry lawyers when approached by an angry former employee looking to sue the former employer firm: Can I win? Hand in hand with such a preliminary query are the questions of how much is my case worth and is there anything you can do about that crap they posted on my Form U5? A recent FINRA Arbitration answers some of those nagging questions. Whether or not the answers are satisfactory depends on a number of factors. READ