Exam Alert: SEC Issues Bulletin Regarding Diminished Financial Capacity

On June 1, 2015, the SEC issued an investor bulletin about “diminished financial capacity”, which refers to when an individual becomes unable to manage their finances. They recommend a number of steps for individuals to take to prepare for such a condition. Continue reading

Exam AlertOn June 1, 2015, the SEC issued an investor bulletin about “diminished financial capacity”, which refers to when an individual becomes unable to manage their finances. They recommend a number of steps for individuals to take to prepare for such a condition. These steps include:

  • Organize important documents and keep them safe and accessible
  • Give your financial professionals emergency contacts
  • Keep your information and contacts updated
  • Report financial fraud and abuse

Some other options to consider include:

  • Authorizing a durable power of attorney
  • Getting someone you trust involved

Source: Investor Bulletin and Consumer Advisory: Planning for Diminished Capacity and Illness

This alert applies to the Series 6, Series 7, Series 52, Series 65, and Series 66.

Exam Alert: MSRB establishes regulation of broker’s brokers and related dealers

Effective December 22, 2012, the MSRB will implement a new rule that imposes fairness obligations on both broker’s brokers and the dealers who interact with them. The MSRB will also put in effect related amendments and interpretive guidance. Continue reading

Effective December 22, 2012, the MSRB will implement a new rule that imposes fairness obligations on both broker’s brokers and the dealers who interact with them.  The MSRB will also put in effect related amendments and interpretive guidance.  For broker’s brokers:

-The new rule requires broker’s brokers to make a reasonable attempt to buy securities at a fair price and that requires them to sell securities at a fair price.

-The rule puts in place safeguards regarding the use of a “bid-wanted,” which is where a broker’s broker seeks out bids for a bond that a dealer wishes to sell.

-The new rule also requires broker’s brokers to establish and publicly disclose policies designed to ensure that the broker maintains their place as a market intermediary.

-Amendments to existing rules impose additional recordkeeping requirements.

 

For dealers who interact with broker’s brokers:

-The rule prohibits dealers from making “throw-away” bids (bids below the fair market value of a security) on a bid-wanted in order to shut other dealers out of the market.

-An interpretive guidance warns dealers who use broker’s brokers that the dealer retains the responsibility to ensure a fair price for their customers, and that they cannot rely on a bid-wanted to produce a fair price.

-The guidance advises against “screening” out other dealers when selling securities through a broker’s broker, unless the dealer has a legitimate reason to do so (one that is not anti-competitive).

-The guidance adds that a dealer should not assume that a customer values fast trade execution over getting a better price.

 

Source: MSRB Receives SEC Approval to Implement Measures to Strengthen Regulation of Broker’s Brokers

This alert applies to the Series 7.

FINRA Alert: New rules for social media and personal device use for business purposes

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities Continue reading

Since FINRA first released rules regarding these issues back in 2010, many in the finance industry have raised questions and concerns over their abilities to comply with these rules while keeping up with explosion of social media.  Last week, FINRA responded to these concerns by releasing several guidelines clarifying rules surrounding use of social media websites and personal devices for business purposes.  For example, some of the guidelines included the following:

  • If an individual posts a statement on Twitter on behalf of the firm, that will likely constitute an interactive statement and not require prior approval by a firm’s registered principal.  However, if that statement is then posted on a blog, becoming a static statement (and therefore an advertisement), prior approval is necessary.
  • Whether a statement is interactive or static, recordkeeping rules still apply.  This means that individuals and/or firms may not use social media sites or devices that automatically delete any posts.
  • Individuals may respond to third-party business-related posts on their personal social media site without violating FINRA guidelines.  However, responses must conform to firms’ individual policies regarding these types of posts.
  • As long as firms are able to keep records and supervise activity, individuals may use their own personal devices (e.g. a smart phone or a tablet) to conduct business and access business applications.  Something to keep in mind when using a personal device to conduct business: firms are allowed to supervise all communications made on personal devices, including personal communications, if the device is ever used for business purposes.

These are just a sampling of issues the recent FINRA Regulatory Notice addressed.  Please click here to review the full notice.

Exam Alert: Large traders must identify themselves to the SEC

The SEC has adopted rules that require “large traders” to register with the Commission and receive unique identification numbers. The traders must then Continue reading

The SEC has adopted rules that require “large traders” to register with the Commission and receive unique identification numbers.  The traders must then provide their broker-dealers with their ID numbers when they make trades, and the broker-dealers must record the ID numbers as part of their recordkeeping and transaction reporting requirements.  A “large trader” is a “person whose transactions in exchange-listed securities equal or exceed two million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month.”  Relevant to the Series 79, 62, 55, 7, 26, and Series 24 exams.

Source: SEC Release 2011-154

Further Reading: Analysis by the Securities Technology Monitor

Exam Alert: SEC approves consolidated FINRA rules on books and records

The SEC has approved a new set of FINRA Rules governing books and records. These rules will be effective December 5, 2011. The rules state that records Continue reading

The SEC has approved a new set of FINRA Rules governing books and records.  These rules will be effective December 5, 2011.  The rules state that records for which no retention period is given under FINRA or Securities Exchange Act rules must be kept for six years.  Firms must now record the name of the agent(s), if any, responsible for an account.  Relevant to the Series 6, 7, 62, 24 and 26. Additional changes can be found here: http://www.finra.org/Industry/Regulation/Notices/2011/P123549.