FINRA Amends Customer Code of Arbitration Procedure Regarding Panel Selection in Cases with Three Arbitrators

The SEC approved amendments to FINRA Rule 12403 of the Code of Arbitration Procedure for Customer Disputes, increasing the number of arbitrators on the public arbitration list from 10 to 15, and increasing the number of strikes to that same list from four to six.  The chairperson and non-public arbitration lists will remain unchanged at 10 arbitrators each. Under current…

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Former UBS Registered Representative Wins Expungement of Eight Customer Complaints Related to Lehman Brothers Principal Protected Structured Products (FINRA Arbitration No. 14-02603)

A FINRA arbitration panel out of Louisville, Kentucky recently granted the request of former UBS registered representative Harry M. Hadden III (“Hadden”) to expunge eight (8) customer complaints from his Central Registration Depository (“CRD”) record related to the sale of certain Lehman Brothers Structured Products during the financial crisis that began in 2007. Pursuant to FINRA’s Code of Arbitration Procedure…

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FINRA Issues Q&A on Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers)

FINRA Rule 2273 (“Rule 2273”) becomes effective on November 11, 2016, after initial approval by FINRA in March of this year.  Rule 2273 requires all FINRA member firms that recruit a registered representative after November 11, 2016 to deliver a FINRA-created educational communication highlighting key considerations for the representative’s former customers.  In response to queries from its members, FINRA released…

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SEC Amends Rules of Practice for Administrative Proceedings

The SEC recently enacted amendments to its Rules of Practice for Administrative Proceedings, making changes first proposed by the Commission in September 2015. The new amendments address recent criticism regarding the SEC’s increased use of administrative proceedings and the perceived lack of due process afforded in such proceedings. The rule changes have two major objectives: lengthening the prehearing timeline for…

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SEC Approves FINRA Rule Requiring Firms to Provide an “Educational Communication” to Former Clients of Transitioning Registered Representatives

The SEC approved a disclosure rule proposed by FINRA requiring that member firms hiring or associating with a registered representative provide the representative's former clients an “educational communication” to be written by FINRA.   The communication is intended to prompt a former client to make further inquiries of the representative and their new and old firm to the extent that the client considers the information important…

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Unregistered Advisers: A Potential Trap for Unaware Investors and Custodian Broker-Dealers

By: DWH Legal Since the 2008/2009 financial crisis, many former financial advisors, portfolio managers and investment adviser representatives have elected to branch out on their own and serve as independent investment advisers.  Often times, these investment advisers fall below the SEC registration requirement of $25 million assets under management but, importantly, fail to consider registering as advisers in the state…

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The SEC Highlights Growing Concerns About Private Tech Startup Funding To Eager Investors

By: DWH Legal On Wednesday, at the annual Securities Regulation Institute conference in Coronado, California, Securities and Exchange Commission Chair Mary Jo White shared the agency’s growing  concern about the aggressive promotion of private tech startup companies to investors.  The SEC’s concern centers around investors unable to receive sufficient or accurate information when choosing to make investments. Many tech startups…

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FINRA Releases Its Regulatory and Examinations Priorities for 2016

By: Doug Hyman, Principal, DWH Legal On January 5, 2016 the Financial Industry Regulatory Authority (“FINRA”) published its 11th annual Regulatory and Examination Priorities letter containing its areas of focus in 2016.  Within the letter FINRA highlights three broad areas of focus - culture, conflicts of interest and ethics; supervision, risk management and controls; and liquidity.  The letter goes on…

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