Articles Posted in FINRA Regulation

In a recent report, the Wall Street Journal said FINRA’s investments are underperforming. The self-regulatory organization boasts a $1 billion yearly budget, and it easily collects over $100 million per year through the imposition of fines. According to WSJ journalists, throughout its existence, FINRA’s $1.6 billion investment portfolio has yielded $440 million less than what…

Aspiring brokers will no longer need a firm to sponsor them in order to take FINRA’s competency exams. The Securities and Exchange Commission has just approved FINRA Regulatory Notice 17-30, which will make this and other changes effective within a year. According to FINRA, the rule change aims to: adopt consolidated FINRA registration rules; restructure…

“Arbitrators have a unique, distinct role in ensuring that customer dispute information is expunged from the CRD system only when it has no meaningful investor protection or regulatory value.” FINRA (September, 2017) In a new push for closer scrutiny over expungements, FINRA has just updated its Notice to Arbitrators and Parties on Expanded Expungement Guidance.…

During a recent Financial Services Subcommittee oversight hearing, both Democrat and Republican lawmakers raised concerns before FINRA CEO Robert Cook. Some of the issues discussed were the Regulatory Authority’s standing as a private entity and its handling of fine proceeds, which hit a record $173 million in 2016. One of the main criticisms voiced by…

Over the course of 2016, FINRA expelled 24 firms from membership and fined offenders for a total of $176 million. The largest fine amounted to $25 million, paid by MetLife Securities over negligent misrepresentations and omissions in connection with variable annuity replacements. A total of $27,9 million from monetary sanctions corresponded to customer restitutions. In…

In a speech delivered at Georgetown University, FINRA CEO Robert Cook expressed the Regulatory Authority’s intent on helping brokerages identify and supervise brokers with a history of disciplinary action. From now on, FINRA is going to look very closely at how firms hire and supervise high-risk brokers, Cook explained. Firms should have heightened supervision in…

Regulatory compliance is often less costly than FINRA’s steep fines. Yet companies continue to face millions of dollars in penalties for not complying with FINRA’s regulations. In this particular time, there is a clear intent from FINRA to hold such companies accountable. Unfortunately, many of them have learned this the hard way. FINRA has just…

At a recent event hosted by the American Bar Association’s Securities Litigation Committee, three Chief Counsel from the Financial Industry Regulatory Authority’s Enforcement division discussed the agency’s current priorities. Chief Counsel Sue Light, Gina Petrocelli, and Lara Thyagarajan shed light on the areas that FINRA will be scrutinizing more closely through the second half of…

With the increase in FINRA enforcement activity in the last year, we hear daily from concerned RAs and other financial industry professionals – this post is intended to decode the basics of the process and offer some cautions to avoid pitfalls awaiting the unwary. 1. How can you become a target of a FINRA investigation?…

Purshe Kaplan Sterling Investments (PKS) of Albany, New York, recently agreed to pay $3.4 million to a Native American tribe to resolve allegations that one of its brokers, Gopi Krishna Vungarala, took millions of dollars in undisclosed commissions on the tribe’s investments. Vungarala was not only a financial advisor to the tribe; he was also…