April 30, 2022
A former Cetera Financial associated person alleged that the FINRA member firm had engaged in a pre-meditated scheme to defame and wrongfully terminate his employment. In putting a price-tag on his damaged reputation, Claimant asked between $1.5 and $3.6 million in damages. Not a bad neighborhood but would it prove to be a fantasy? Hint: the headline to this article is a classic spoiler alert!
There is a moral hazard when the SEC publishes an increasing number of alerts and press releases. The flurry of headlines fosters a false sense of comfort in the investing public's minds. Too many investors believe that Wall Street's regulators use state-of-the-art computers and cutting edge software in order to ferret out sophisticated fraudsters. The public believes that Wall Street's regulators are employing staff and dollars towards shutting down fraud. Frankly, all of this somewhat self-serving press diverts dollars and bodies from the front lines of enforcement against fraud. At some point, one wonders -- one should ask -- if the SEC spends too much time issuing alerts and not enough time going after the very fraudsters and scammers about whom the alerts are being issued.
In a recent FINRA Arbitration, a public customer sued Robinhood, but then the Claimant sort of declined to climb into the ring for the first round. There are those matches where one fighter says "no mas," but they can't find the hammer to ring the bell. Some fights just end ugly.
A Trustee opened an E*Trade account by providing his name and his social security number but also checking off the type of account as "Trust." What does that make the account? An Individual account? A Trust account? A failed account? When E*Trade got sued in state court by the customers, the Trustee argued that he had never executed any account agreement in his role as a Trustee but only in a "personal capacity." Will a federal court force the Trust into mandatory FINRA arbitration?