Blog by Bill Singer WEEK IN REVIEW

April 7, 2018

Crash And Burn Upon Entry Into Wall Street ( Blog) Most of us run into some problems during our lifetimes. For some of us, the resolution of such issues may be to pay a fine or sit down for a suspension or promise never to do something again. In some cases, our problems involve dealing with a government agency and the sanctions that they hand down may be so severe as to amount to the ending of a career -- which often prompts folks to seek work elsewhere and try to start over. In a recent FINRA disciplinary settlement, we come across the tale of a former escrow agent who wound up getting fined and barred by two different states in 2013 and 2014 respectively. Perhaps trying to start anew, this individual attempted a new career in the securities industry. Sometimes you can run from your past. Sometimes you can't. Today's Blog examines the latter variation. Another story of crash and burn on Wall Street

Securities And Exchange Commission Imposters Target Public ( Blog) The Securities and Exchange Commission recently posted "SEC Warns of Government Impersonators" (SEC Press Release 2018-55) warning investors about an ongoing scam in which fraudsters claiming to be SEC employees attempt to trick investors into sending money or revealing sensitive account information. As reported by some targets of this fraud, the scheme may start with what seems like a bona fide solicitation to buy stock from a stockbroker or other purported industry professional. Thereafter, you may be contacted by a conspirator pretending to be from the SEC and claiming to need to verify or confirm that transaction. Listen to a taped conversation.

Stormy Daniels Issue Hits FINRA Arbitration Remand ( Blog) Among the more difficult roles that I have as the publisher of the Blog is to present an analysis of a case in which I am troubled by the facts and angered by the decision. In reporting on Wall Street's legal, regulatory, and compliance developments, I frequently find myself at odds with the powers that be. I am an unabashed libertarian (with a small "l") and an unrepentant advocate for free-markets, robust competition, and fair play. I love the clash of ideas in the marketplace. I detest when vested interests unbalance the scales. I hate it when corrupt politicians and regulators do the bidding of their patrons and rig the system. Yes . . . your're right . . . I'm not always right, everyone else is not always wrong, and sometimes I just need to chill. That being said, you're an idiot and I fully respect that you have the right to be wrong. Having shown my magnanimous attitude, let me present to you today's featured court opinion about Wall Street arbitration . . . grrrrrrrrrr . . .

Federal Appeals Court Reverses PCAOB and SEC over Denial of Ernst & Young Expert Witness ( Blog) You know when you read something that's "official" and, at first blush, it doesn't make sense? Of course, you figure you must have missed something, so you re-read it but, gee, it still doesn't make sense. Then you look at the heading of the document and it's from some governmental agency or court and you figure that they must know what they're talking about and, after all, I'm just an idiot. At this point, you often go back, re-read the thing a third time but now assume whatever is necessary to bring reason to the pages and you relinquish all sorts of objections that get in the way. Voila, it now all makes sense! Of course, you may also wind up walking away as did Galileo muttering "And yet it moves." Speaking of walking away and how things still move, I recently followed a mess involving the crosshairs PCAOB, the SEC, and a Ernst & Young audit partner. The E&Y audit partner came within the of PCAOB and was suspended and fined, which the SEC affirmed. Frankly, I didn't feel much sympathy for the guy and felt and still feel that PCAOB had him dead to rights. On the other hand, when the PCAOB was investigating the audit partner, they scheduled an interview at which he was accompanied by a lawyer employed by E&Y. Not my preferred manner of representation given the potential for conflicts in such cases but it's common enough that it's not that big a deal. On the other hand, PCAOB denied the lawyer's request to be accompanied by an accounting expert, who was also an E&Y employee. As best I could understand PCAOB's position on denying the expert's attendance, the regulator kept saying that it didn't want an employee of the firm present at the individual's interview -- but, you know, I kept noticing that the lawyer representing the individual was an E&Y employee and, hey, what's up with that? How come it's okay to have one E&Y employee present at the interview but not another? Seemed to me that PCAOB was sort of making it up as it went along.

Federal Courts Wrestle With Opening Doors To US Courthouse To KOSPI Class Action ( Blog) When we talk about the globalization of Wall Street, we need look no further than a recent class action lawsuit filed in the United States District Court for the Southern District of New York ("SDNY") by five Korean citizens plaintiffs, who traded KOSPI 200 future contracts in the after-hours (the "night market") on the Korea Exchange ("KRX"). You might ask with some validity as to how such a case would have jurisdiction in the US courts. That's a fair question and, frankly, you're a pretty clever person to have raised the point. Then there's the whole mixing of the real and the digital worlds. Where does anything online occur anymore? If you enter a trade in Korea that is sent to a server based in the United States but routed back for settlement to Korea, how do we figure out just where "where" is? As more transactions move to the Cloud, the question of where something takes place may become more difficult. Read on and see how the US court system handled that very problem.