Steps by Congress or the SEC should also be considered to remedy the unpaid arb award problem, FINRA said A quarter of all Financial Industry Regulatory Authority customer arbitration cases that awarded damages went unpaid in 2016, according to a just released discussion paper by FINRA.

Andrew Stoltmann, president of the Public Investors Arbitration Bar Association, called the percentage “massive,” but applauded FINRA for “attempting to get on top” of the issue by releasing the discussion paper.

The paper — "FINRA Perspectives on Customer Recovery" — released Wednesday, details perspectives on customer recovery of judgm...

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The Securities and Exchange Commission on Monday requested a $1.66 billion budget for fiscal year 2019, a 3.5% increase over the agency’s 2018 request, which would allow the securities regulator to restore 100 positions lost during the 2017 hiring freeze.

The agency’s annual appropriations has remained essentially flat from 2016 to 2018, at $1.6 billion. However, during the same period, securities trading has grown by more than $3 trillion, assets under management by investment advisors has jumped more than $5 trillion, and there’s been a 17% growth in ETFs and mutual funds.

The securities regulator has not yet received its 2018 appropriations.

SEC Chairman Jay Clayton said the FY 2019 budget request “reflects our to...

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Encourages IA Self-Reporting & the Prompt Return of Funds to Investors

The SEC's Division of Enforcement announced a self-reporting initiative that seeks to protect advisory clients from undisclosed conflicts of interest and return money to investors.

Under the Share Class Selection Disclosure Initiative (SCSD Initiative), the Division will agree not to recommend financial penalties against investment advisers who self-report violations of the federal securities laws relating to certain mutual fund share class selection issues and promptly return money to harmed clients.

Under the SCSD Initiative, the Enforcement Division will recommend standardized, favorable settlement terms to investment advisers that self-report that they failed to disc...

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FINRA Releases Paper Providing Perspectives on Customer RecoveryWASHINGTON — The Financial Industry Regulatory Authority (FINRA) today released a paper providing perspectives on customer recovery of judgments and awards in the financial services industry, with a particular focus on the arbitration forum operated by FINRA. The paper – FINRA Perspectives on Customer Recovery – is intended to encourage a continued dialogue about addressing the challenges of customer recovery across the industry while directly informing the further enhancement of recovery in FINRA’s forum. As noted in the paper, FINRA plans to organize discussions with other regulators and policymakers to further address the issue of customer recovery...

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With governments around the globe cracking down on all aspects of the cryptocurrency market, it seems like new regulatory risks arise every day. Add U.S. sanctions to that list.

On Jan. 19, the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC), the primary sanctions enforcer in the U.S., announced that any U.S. person dealing in Venezuela’s soon-to-be-introduced cryptocurrency, the petro, could run afoul of U.S. sanctions against the Venezuelan government.

Couple that with recent comments from U.S. Secretary of the Treasury, Steven Mnuchin, warning that the U.S. is determined not to let bitcoin wallets become a new version of the Swiss bank account, and it appears that the Treasury Department is poised t...

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Washington D.C., Feb. 7, 2018 —
The Securities and Exchange Commission's Office of Compliance Inspections and Examinations (OCIE) today announced its 2018 examination priorities. OCIE publishes its exam priorities annually to improve compliance, prevent fraud, monitor risk, and inform policy. Of particular interest this year will be matters involving critical market infrastructure, duties to retail investors, and developments in cryptocurrency, initial coin offerings, and secondary market trading.

"I appreciate OCIE's dedication to maximizing the effectiveness of their resources with a keen eye toward asset verification, market infrastructure, and duties owed to retail investors," said SEC Chairman Jay Clayton.

"As the markets continu...

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Washington D.C., Jan. 30, 2018 —
The Securities and Exchange Commission obtained a court order halting an allegedly fraudulent initial coin offering (ICO) that targeted retail investors to fund what it claimed to be the world’s first “decentralized bank.”

According to the SEC’s complaint, filed in federal district court in Dallas on Jan. 25 and unsealed late yesterday, Dallas-based AriseBank used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months.

AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their purported “AriseCoin” c...

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HomeNewsroomNews Releases
News Release
For Release: Monday, February 5, 2018 Contact(s):
Michelle Ong (202) 728-8464
Mike Rote (202) 728-6912

New FINRA Rules Take Effect to Protect Seniors and Vulnerable Adults from Financial ExploitationFirst Uniform, National Standards to Protect Senior InvestorsWASHINGTON — Two FINRA rule changes took effect today addressing the financial exploitation of seniors and vulnerable adults, putting in place the first uniform, national standards to protect senior investors. Firms are now required to make reasonable efforts to obtain the name of and contact information for a trusted contact person for a customer’s account. In addition, the rule permits FINRA member firms to place a temporary hold on a ...

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WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today that it has fined Wedbush Securities Inc. $1.5 million for violating the Securities and Exchange Commission’s (SEC) Customer Protection and Net Capital Rules, and for related supervisory and books and records failures.

The SEC Customer Protection Rule creates requirements to protect customers' funds and securities. To ensure that customers could recover their assets in the event of the broker-dealer's insolvency, the rule requires the broker-dealer, which maintains custody of customer securities, to obtain and maintain physical possession or control over certain of those securities. These securities must be segregated in a “control location,...

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A lot of broker-dealers prefer to have their CCO and FINOP in-house, where they can keep their pulses on business activity and compliance. However, it is often easy to overlook the Risks involved in taking that approach:

The Risks:

The Way It’s Always Been Done: A lot of In-House CCOs and FINOPs use their experience as their greatest tool. However, often times, what worked in 2007 doesn’t work in 2017. Regulators are sharper, and business is more complex. Do your firm’s supervisory controls align with the business that your firm conducts? How are other firms in your business segment identifying their risks and controls? If your CCO doesn’t work for any other BDs, how would he or she know? FINRA examines from a diver...

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