Securities industry regulatory body, FINRA (the Financial Industry Regulatory Authority), released its proposal for a rule that would crack down on firms with a high concentration of “bad” brokers. With its latest regulatory notice, FINRA stated that it would increase oversight of brokerages with a “significant history of misconduct,” requiring them to set aside additional funds that cannot be withdrawn without FINRA’s consent.
The financial industry self-regulator, FINRA, issued a new regulatory notice today aimed at broker-dealers with departing brokers. The notice was intended to urge broker-dealers to be more clear and forthright with customers about departing brokers and what will happen to the customers’ accounts. If you’ve ever been in the situation where your broker has either left for another firm, left the industry, or passed away, you understand just how confusing things can get when it comes to who will be handling your investments and why.
In many cases, the operators of financial frauds and Ponzi Schemes the world over rely on people who have already been duped to bring in new suckers. Of course, the ones touting the services of a particular fraudster have no idea they’ve not only been deceived, but that they are helping weave an even larger web of deception. While it’s appealing to let others pick your advisor for you, the best thing to do is ‘trust but verify’ all financial opportunities.
FINRA is far from a shadowy regulatory agency. They do their best to find themselves in the public eye, if only to keep investors informed on current regulations and scams. They also keep an exhaustive database of the professional records of all registered broker-dealers and financial advisors; the database is online and searchable. FINRA’s BrokerCheck is a mighty tool for investors seeking to learn more about their advisors; it’s one of many tools and rules that investors can use to protect themselves against fraud and malfeasance.
The last few months have been a difficult time for many investors. The stock market has taken a major dive, closing out 2018 with the worst performing December since The Great Depression. With so much volatility, it’s crucial that investors have a carefully planned portfolio with an adequate amount of diversification. Above all, that portfolio should match the individual investors risk tolerance and investment objectives. That match must be valid from the day it was made until today. A portfolio that worked for an individual investor in a bull market may be a terrible match for that same person in a bear market.
An investor gets introduced by mutual friends to a financial professional who almost immediately begins pitching the investor on an amazing opportunity. Because the investment professional seems like a good guy or gal, and because he or she was introduced by someone the investor already knows and trusts, the investor unconsciously transfers that sense of trust to the broker or hedge fund manager or mutual fund whiz. The investor’s guard is already down. What happens next?
In order to reform the system, investor advocacy groups have suggested the SEC enhance the standard to which brokerages and brokers are held with regard to investor best interests. Currently the standard is based on the necessity of matching investor and investment through a concept known as "suitability." Investor advocates like PIABA, however, want to raise the bar to the "best interest” standard.
A judge in Virginia federal court ordered a former broker and his alleged accomplice, former Philadelphia Eagles linebacker Merrill Robertson Jr., to forfeit $8 million. The money was allegedly generated by Robertson and Sherman Vaughn Jr. through the operation of a Ponzi scheme which lasted from 2009 to 2016.
Investment advisors and financial advisors are held to different standards of accountability when it comes to the investments they make on behalf of clients. Investment advisors have long been held to what is called the "fiduciary standard." Find out what the difference means for you and your money.
Thanks to a recent decision by the Fifth Circuit, it appears that brokers will, once again, get off the hook when it comes putting their clients' interests in front of their own. Into the breach has stepped an idea that has been kicking around for a years now, but which may be the best of several uninspiring options to compel brokers to act more responsibly toward investors: The Oath.
According to FINRA, while there is no airtight definition of a high-risk (yet), the regulatory body deploys a set of criteria to help identify these individuals and ratchet up the oversight on them. However you can use these criteria yourself to evaluate your own or a potential FA for excessively risky behavior.
Recently, FINRA created a task force to study the problem and discovered that, in the five years from 2012 through 2016, a total of 268 awards (27% of the cases where investors were successful) or $199 million in awards (29% of total damages awarded to investors) have gone unpaid, the report states.
No, it's not the Polka King of Pennsylvania but something far more prosaic. Last week, according to complaint released by the Securities and Exchange Commission (SEC), a former stockbroker based in Wayne, PA has been sentenced to more than 5 years in prison for operating a $2.35 million ponzi scheme that involved 30 investors.