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The world of private placement transactions is one that is highly scrutinized by both FINRA and the SEC. It seems that with all of the Ponzi schemes and actions for misappropriation of investor monies, private placement transactions are always on the regulators’ exam priorities lists. With that in mind, it is imperative that firms participating in such offerings ensure that their compliance programs are kept current and up-to-date. However, an garageband for windowsarea that is often overlooked in such compliance preparation is the Anti-Money Laundering (“AML”) / Customer Identification Program (“CIP”) process. As with other products sold by a firm, Read More....
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A broker-dealer, especially one that is not a member of the NYSE, may fail to recognize that FINRA Rule 4150(a) requires prior written notice to be given to FINRA whenever it guarantees, endorses, or assumes, directly or indirectly, the obligations or liabilities of another person (for example, an affiliated company). In Regulatory Notice 11-26, FINRA explained that this requirement, which was based on an NYSE Rule, would be new to non-NYSE members because the NASD Rules had no corresponding provision. We encourage broker-dealers to take a closer look at FINRA Rule 4150 and verify that they are fully complying with Read More....
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FINRA has long been concerned with practices used by broker-dealers and their newly registered representatives to convince clients to transfer accounts from the representative’s old firm as well as the fees that are sometimes associated with such transfers. To address these concerns, FINRA proposed Rule 2273 which is intended to establish a requirement for broker-dealers to deliver an educational disclosure to potential clients in connection with recruitment practices and account transfers. The SEC has approved FINRA Rule 2273 and it will be effective on November 11, 2016. Representatives who begin working for a new broker-dealer often contact former customers hoping Read More....
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On June 27, 2016, the Securities Exchange Commission (SEC) has issued an alert for investors to be careful with any communications seemingly sent from the SEC. Government impersonators are targeting victims of previous frauds. These impersonators are sending official-looking documents to investors, often claiming that they can help the investor recover their investment-related losses. But, of course, the investor must pay a fee first. Usually, this fee is disguised as some sort of tax, deposit, or refundable insurance bond that the investor must pay. Another method these SEC impersonators are using is claiming to offer legal services. They claim they Read More....
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The FINRA journey of changes in ownership and control for a FINRA member firm is one that can be difficult to traverse without a proper guide. The FINRA Continuation of Membership Application (“CMA”) process is covered under NASD Rule 1017. The rule provides that should a member firm wish to make any changes as detailed in Rule 1017(a), an application must be filed with FINRA. More specifically, these events include: a merger, an acquisition, an asset acquisition, a change in ownership or control or a material change in business operations as defined in NASD Rule 1011(k). With reference to CMA filings Read More....
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Recently, the Financial Industry Regulatory Authority, Inc. (FINRA) has made it clear that it is keeping a close eye on the variable annuity (VA) sector. The impetus for this scrutiny was the record setting fine related to variable annuities against MetLife Securities, Inc. MetLife was fined $25 million for negligent misrepresentations and omissions in connection with variable annuity replacements. To understand why this case lead to FINRA targeting variable annuities, it is important to look into the details of the case. In order to recommend replacing a variable annuity with another variable annuity, one must be knowledgeable about the complex Read More....
