On April 20, 2023, the Securities and Exchange Commission (”SEC) released a staff bulletin regarding the standards of conduct for broker-dealers and investment advisors. The bulletin is focused primarily on the Care Obligation of Regulation Best Interest (“Reg BI”) for broker-dealers and the duty of care enforced under the Investment Advisers Act of 1940 (the…
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The Financial Industry Regulatory Authority (FINRA) is ramping up enforcement against registered representatives who violate the Best Interest Obligation of the SEC’s Regulation Best Interest (“Reg. BI”). In February 2023, FINRA announced that it had disciplined two New York-based registered representatives for violating Reg BI. Tony Cirella and Edward Scott Short, both of the Melville,…
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The Financial Industry Regulatory Authority (“FINRA”) has released its 2023 report regarding FINRA’s Examination and Risk Monitoring Program (the “Report”). FINRA’s intent is that the Report be an up-to-date, evolving resource which member firms can use to strengthen their compliance programs. This year’s Report addresses a materially broader range of topics than in prior years….
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In a November 10, 2022, interview with CNBC’s “Squawk Box”, SEC Chair Gary Gensler called for greater protections for investors in the cryptocurrency space following the stunning collapse of crypto exchange FTX. According to FTX’s now-former CEO Sam Bankman-Fried, the crypto exchange is facing a shortfall of up to $8 billion. On November 2, 2022,…
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The Financial Industry Regulatory Authority has disciplined a formerly registered representative for violating Regulation Best Interest (“Reg BI”). In a first-of-its-kind disciplinary action, Charles Malico of Huntington Station, New York, has been fined $5,000 and suspended for six months for “recommending a series of transactions in the account of one retail customer that was excessive…
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FINRA has proposed a new set of rule changes to overhaul the expungement process. The proposed changes have been sent to the SEC for approval. When discussing the proposed amendments, FINRA advised the proposal targeted “straight-in expungements” and are an attempt to modify the system so these expungements “operate as intended” and “work as a…
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FINRA has announced Merrill Lynch, Peirce and Finner & Smith, Inc. was fined more than $15.2 million for restitution owed to customers who purchased Class C mutual funds shares despite the availability of Class A mutual fund shares. In differentiating between the two types of mutual fund shares, FINRA noted Class A shares are subject…
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The Securities and Exchange Commission has proposed new regulations that could be disruptive to Financial Advisors. There are currently 12 proposals and 26 more being discussed. One such proposal seeks to address the practice of “greenwashing”, which refers to firms or companies claiming to abide by ESG principles when they are actually not. The proposed…
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FINRA has announced that it has fined Wefunder and StartEngine Capital for failure to comply with various securities rules and laws designed to protect crowdfunding investors. Wefunder was fined $1.4 million for violations that occurred from 2016 to 2021. FINRA found the company exceeded the scope of its permitted activities by raising $20 million in…
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FINRA released Notice 21-43 which answered frequently asked questions about Restricted Firm Obligations. Rule 4111, or Restricted Firm Obligations, became effective on January 1, 2022, and sets additional requirements for broker-dealers with a significant history of misconduct. Rule 4111 requires member firms that are identified as Restricted Firms deposit cash or qualified securities in a…
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