Receiving a subpoena from the U.S. Commodity Futures Trading Commission often causes panic by the recipient given the civil and criminal penalties associated with Commodities Exchange Act violations. The recipient may have no advance notice of the subpoena and may be unaware if they are a target of the CFTC’s investigation or merely an individual…
Continue reading ›In Next Financial Group, Inc. v. GMS Mine Repair and Maintenance, Inc., Case No. 3:19-cv-168 (USDC W.D. Pa.), the federal court was asked to define the term “customer” as it relates to FINRA’s Code of Arbitration Procedure. The definition of that term carries significance because “customers” can compel a member firm to participate in FINRA…
Continue reading ›On March 11, 2020, FINRA charged an FA with structuring cash transactions in his personal bank account so as to evade reporting requirements. This case is worth a read because it highlights FINRAs commitment to pursue AML and AML-like cases. Case in Point In Department of Enforcement v. David R. Oakes, Disciplinary Proceeding No. 2018057755201,…
Continue reading ›This is a classic case of buyer’s remorse. In the case at hand, FA Jeffrey Mohlman settled with FINRA by executing a letter of Acceptance, Waiver and Consent (called an AWC) and, in so doing, agreed to a bar from the securities industry. Apparently displeased with his decision, he filed an action in court seeking…
Continue reading ›New Rule Virginia recently added Section F to 21 VAC5-80-200 (Dishonest or Unethical Practices), which provides: “For purposes of this section, any mandatory arbitration provision in an advisory contract shall be prohibited.” Background On June 27, 2019, Virginia issued a proposal to amend certain regulations administered by the Virginia Division of Securities. The State Corporation…
Continue reading ›Courts call a lifetime bar “the securities industry equivalent of capital punishment.” PAZ Sec. Inc. v. SEC, 494 F.3d 1059, 1065 (D.C. Cir. 2007). It is a draconian measure which not only permanently removes you from the securities industry but also subjects you to “statutory disqualification” under Section 3(a)(39)(A) of the Securities Exchange Act of…
Continue reading ›This blog post looks at an interesting FINRA arbitration award issued on January 7, 2020: Daniel Paul Motherway v. UBS Financial Services, Inc., FINRA Arbitration No. 17-02799. This case seems to prove the old adage: a man who is his own lawyer has a fool for a client. Here we have an FA who proved,…
Continue reading ›On January 3, 2020, FINRA released an AWC for Robert James D’Andria, Case No. 2017056579502. At first blush the AWC seems rather plain vanilla. The FA recommended high-risk products, in this case leveraged and inverse exchange-traded notes and funds, to retail investors and FINRA deemed those recommendations to be unsuitable. FINRA suspended the FA for…
Continue reading ›FINRA published an interesting arbitration award on December 27, 2019. In Raymond James & Associates, Inc. v. Gregory D. Clark (FINRA Case Number 18-04011), Raymond James claimed that Mr. Clark breached a settlement agreement related to the repayment of a promissory note. Raymond James requested, and was awarded, compensatory damages of $206,000 plus interest pursuant…
Continue reading ›On December 20, 2019, FINRA announced a settlement with John Carneglia. According to the AWC, Carneglia violated FINRA Rule 3210 for failing to notify his member firm of a brokerage account and violated FINRA Rule 3270 for failing to timely disclose an outside business activity. Underlying Facts Carenglia was registered with BNP Paribas from June…
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