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
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. 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.
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.
On December 5, 2011, new FINRA rules regarding books and records took effect. These changes affect recordkeeping time limits, customer account information, customer complaints, order information and arbitration agreements. Continue reading
On December 5, 2011, new FINRA rules regarding books and records took effect. These changes affect recordkeeping time limits, customer account information, customer complaints, order information and arbitration agreements.
Recordkeeping – the default time limit for keeping records is six years. This means that if FINRA requires a firm to keep a record but does not specify how long the record must be kept, it must be kept for six years. If a change is made to an account and documentation is required to make that change, the documentation must be preserved for six years after the change. If the account is closed, the firm must maintain the most current information about the account for six years after the account closes.
Account information – When opening an account, the signature of the registered representative opening the account is no longer needed. Instead, FINRA requires the signatures of all persons who are responsible for the account. Additionally, discretionary accounts no longer require the age of the person with discretionary authorization. Instead, an acknowledgment that said person is over 18-years-old, without a specific age, is sufficient.
Customer complaints – Firms must now keep records of customer complaints for four years, not three.
Order information – Previously, firms were allowed to accept block orders from an investment adviser for customer accounts if the firm received the specific account names and designations by the end of the business day. Now, firms are allowed to accept orders from an investment adviser for customer accounts if the order involves more than one customer and the firm receives the specific account names and designations by noon of the next business day.
Pre-dispute arbitration agreements – The disclosure language for pre-dispute arbitration agreements has been updated to include that arbitrators are required to explain their decision in eligible cases if all parties involved file a joint request 20 days before the first scheduled hearing date.
To read Regulatory Notice 11-19 where FINRA outlines these changes in more detail, please click here. Additionally, we have included a summary of these changes on our Exam Updates page, where we include updates to the exams on a regular basis. You may want to brush up on these rules if you’re taking the Series 7, 6, 24, 26, 62, 99 and 79!
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.
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
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.