Blog by Bill Singer Esq WEEK IN REVIEW

October 22, 2022
In today's featured FINRA public customer arbitration, we got a frustrated Interactive Brokers customer. Apparently, this customer telephoned his brokerage firm and didn't get the best or clearest answer to his questions; however, the firm had a policy of not providing advice to self-directed customers and that was the nature of the customer with the questions. So . . . what happens when a customer who is supposed to handle his own trading asks for help from a firm that says it doesn't provide advice? Does the firm's policy give it license to offer incorrect or confusing answers? What if the desired order wouldn't have gotten filled regardless of the advice given? What if you can't get no satisfaction?
Sometimes you just have to shake your head. Human beings have an amazing capacity for getting themselves embroiled in all sorts of nonsense, then doing whatever it takes to make matters worse, and then, when all else fails, blame everyone else for their predicament. After a FINRA OHO Panel Decision displayed human folly in all its dubious glory; the same silliness got dredged up on appeal before a FINRA NAC Panel.
Few things inflame the passions on Wall Street more than deferred compensation. Parties often disagree whether deferred comp disputes are subject to mandatory FINRA intra-industry arbitration or can be diverted to a non-FINRA arbitration forum or have to be litigated in a federal court or a state court. Without question, this is a quagmire created by the broker-dealers in order to make it all that more painful and costly for reps to move to another firm; as evidenced by the layers of entities involved in employing the rep versus those issuing an employee-forgivable-loan/promissory note versus those handling the deferred comp plan. Recently, a messy lawsuit highlights many of the issues.
In January 2021, FINRA entered into a regulatory settlement whereby the regulator fined and suspended a stockbroker because of his willful nondisclosure of tax liens. That willful misconduct triggered the broker's statutory disqualification from registration -- so, even after he spends three months on the sidelines, he can't just stroll back into the biz. Except, FINRA can't quite seem to pass by a dead horse without giving the expired beast a couple of extra kicks. Making matters worse, the extra kicks are really, really belated.