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Category Archives: FINRA

ArbitrationTask Force Attorney Mark Maddox Served on Final Report Issued

Our own attorney Mark Maddox served as one of the 13 members of the FINRA Dispute Resolution Task Force Members. FINRA released their recommendations this week in the  Final-DR-task-force-report. With 51 recommendations to enhance the arbitration and mediation forum, the next step is for FINRA’s Standing Board Advisory Committee to review them. The National Arbitration and Mediation Committee (NAMC) will meet to discuss the report and can make recommendations on items to implement immediately, items that will require further discussion and items that may not be feasible. Click here for a link to FINRA’s press release on Explained Decisions, Increased Arbitrator Honoraria, Creation of a Special Arbitrator Panel for Expungement Hearings Among Recommendations

MetLife Variable Annuities

FINRA has notified MetLife that it is recommending disciplinary action due to its sales of variable annuities. FINRA’s  concerns include misrepresentations, unsuitable investments, and supervision in connection with the sales and replacements of variable annuities and certain riders associated with them. Please contact us if you have any questions or concerns about your purchase of MetLife variable annuities.

Regulators Bar Adviser Tom Buck From Securities Industry

On July 24th, FINRA permanently barred former Merrill Lynch broker Tom Buck from the securities industry. FINRA alleged that Buck engaged in unauthorized trading, improperly used commission based accounts when fixed fee accounts were more appropriate, and misled clients about fees they were paying in their accounts. Our firm is continuing to assist investors in their potential claims against Merrill Lynch and Tom Buck for all these matters.

Checkout the below links for more on this story:

FINRA Consent Agreement Buck



LPL Ordered to Pay 10M in Fines & 1.7M in Restitution

LPL Financial LLC facing 11.7M in sanctions by FINRA for widespread supervisory failures related to complex product sales, trade surveillance, and trade confirmations delivery. Supervisory failures include the sales of non-traditional exchange-traded funds, certain variable annuity contracts, non-traded real estate investment trusts, and other complex products, as well as failing to monitor and report trades and deliver customers millions of trade confirmations. In addition, FINRA ordered LPL to pay 1.7M in restitution to specific customers who purchased non-traditional ETFs. The firm may pay additional compensation to ETF purchasers pending a review of its ETF systems and procedures. LPL consented to FINRA’s findings.

RBC Ordered by FINRA to Pay More than $1.4M in Fines and Restitution for Unsuitable Sales of Reverse Convertibles

FINRA found that RBC failed to have supervisory systems practically designed to identify transactions for supervisory review when reverse convertibles were sold to customers, in violation of FINRA’s rules as well as the firm’s own suitability guidelines. RBC established suitability guidelines for the sale of reverse convertibles setting specific criteria for customer investment objectives, annual income, net worth, liquid net worth and investment experience. Consequently, the firm unsuccessfully detected the sale by 99 of its registered representatives of 364 reverse convertible transactions in 218 accounts that were unsuitable for those customers. The customers sustained losses totaling at least $1.1 million. RBC made payments to several customers pursuant to the settlement of a class action lawsuit; FINRA ordered compensation to the remainder of affected customers. Resulting in FINRA ordering RBC Capital Markets to pay a $1 million fine and approximately $434,000 in restitution to customers for supervisory failures resulting in sales of unsuitable reverse convertibles.

Report on National Senior Investor Initiative Released by FINRA & SEC

Over the next 15 years more and more baby boomers will be turning 65, the SEC and FINRA issued a report this month to help broker-dealers evaluate, craft, or improve their policies and processes for investors as they prepare for and enter into retirement. The National Senior Investor Initiative report focuses on issues related to senior investors and regard to compliance with laws, rules, and regulations applicable to senior investors to be a high regulatory priority. Concerns that some broker-dealers may be recommending riskier and possibly unsuitable securities to senior investors looking for higher returns and may be failing to adequately disclose the terms and risks of the securities they recommend.

Susan Axelrod, FINRA Executive Vice President, Regulatory Operations, says, “With the dramatic increase in the population of our nation’s seniors, it is critical that securities regulators work collaboratively to make sure that senior investors are treated fairly. The culture of compliance at firms is key to ensuring that seniors receive suitable recommendations and proper disclosures of the risks, benefits, and costs of any investments they are purchasing.”

Toll-Free FINRA Securities Helpline for Seniors Launched

FINRA launched their toll-free FINRA Securities Helpline for SeniorsTM this week. Senior investors can call the new toll-free number at (844-57-HELPS or 844-574-3577) from 9:00 a.m. – 5:00 p.m. ET, Monday through Friday, and get neutral, knowledgeable assistance from FINRA staff related to concerns they have with their brokerage accounts and investments.

Susan Axelrod, FINRA’s Executive Vice President for Regulatory Operations, says “Protecting senior investors has been an important priority for FINRA for several years. Our goal in setting up this Helpline is to build on these efforts and provide an additional resource to senior investors. FINRA’s Helpline means that older investors are only a phone call away from getting help with questions or concerns they may have regarding their investments. FINRA staff will point seniors to educational tools that can help them better understand investing, savings and investment products, as well as resources like BrokerCheck that can provide valuable information about securities firms and financial professionals.”

A key priority for FINRA, the protection of senior investors has sparked the need for FINRA Securities Helpline for Seniors, along with their recently published paper captioned Report on National Senior Investor Initiative.

FINRA Unveiled a Redesigned Website

FINRA just unveiled a redesigned website today for arbitration and mediation. It is much more user friendly, checkout the new webpage here:


SEC & FINRA Issue Warning on Leveraged and Inverse ETFs

FINRA and the SEC want to alert individual investors about performance confusion on the objectives of leveraged and inverse ETFs. Investors should be aware that performance of ETFs over a period longer than one day can differ significantly from their stated daily performance objectives.

The best form of investor protection is to clearly understand these types of investments before dishing out your hard earned money. Start by reading the prospectus, which will provide detailed information on the ETFs’ investment objectives, principal investment strategies, risks, and costs. The SEC’s EDGAR system, as well as search engines, can help you locate a specific ETF prospectus. You can also find the prospectuses on the websites of the financial firms that issue a given ETF, as well as through your broker.

Consider pursuing the advice of an investment professional. Work with someone who understands your investment goals and tolerance for risk. Your investment professional should recognize these complex products, be able to explain if or how they fit your personal goals, and be willing to monitor your investment.

As with all investments, it pays to do your own homework. Only invest if you are confident the product can help you meet your investment objectives and you are knowledgeable and comfortable with the risks associated with these specialized ETFs.

Take a look at the alert issued by the SEC for more information and for real-life examples that illustrate how returns on a leveraged or inverse ETFs over longer periods can differ significantly.

10 Wall Street Banks in Trouble for Offering Encouraging Research to Win IPO

Citigroup Inc., Goldman Sachs Group Inc. and eight other securities firms were fined $43.5 million by FINRA who said the companies presented favorable stock research in hopes of winning underwriting business in an initial public offering by Toys “R” Us Inc.

The overall fines are assumed to be the largest in a single case since the 2003 research settlement that barred research analysts from participating in IPO pitches.

FINRA fined the following firms.

FINRA Executive Vice President, Regulatory Operations, Susan Axelrod, said, “FINRA’s research analyst conflict of interest rules make clear that firms may not use research analysts or the promise of offering favorable research to win investment banking business. Each of these firms used their analyst to solicit investment banking business from Toys”R”Us and offered favorable research. This settlement affirms our commitment to policing the boundaries between research and investment banking to ensure that research is not improperly influenced.”

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