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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JPMorgan Chase was recently fined $200 million for allowing employees to use their personal devices to utilize WhatsApp and other social platforms to communicate about company business and sensitive business matters. The SEC found the messages included a wide array of content, including investment strategies, client meeting and market observations. The SEC indicted that the…
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FINRA has released its 2022 Report on Examination & Risk Monitoring which included new risks to monitor this year. The list includes several categories related to 2021’s meme-stock short-squeeze and its continuing fallout. Included in the report for the first time this year include: Muni Shorts & Fails, Trusted Contacts, Crowdfunding and Portals, and Margin…
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FINRA recently announced the results of its targeted examination of Unit Investment Trust (UIT) early rollovers. The investigation resulted in settlement with six member firms, totaling $16.8 million in restitution for approximately 10,000 investors. Following its investigation into the six firms, FINRA concluded that each firm failed to reasonably supervise early rollovers of UIT’s, which…
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After a dramatic boom in options trading this past year, FINRA plans to increase rules governing these risky trades. FINRA plans to solicit opinions on options rules from the public in the coming weeks. “We share the concerns raised by the SEC and others that retail investors may be opening accounts to trade options and…
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