Financial Counsel by Eccleston Law

FINRA Requests Comment on Proposed New In re: Expungement Procedures for Persons Not Named in a Customer-Initiated Arbitration

The SEC has approved a FINRA rule giving reps a process to correct language on their Forms U-4 and U-5. The new process comes into play for reps who are not named in arbitration proceedings, between customers and firms.

Reps wishing to take advantage of the new role must be aware of several critical requirements. Reps are urged to retain securities counsel to navigate through the process.

Don't Cut and Paste Signatures

We often defend reps who themselves or their sales assistants cut corners. Maybe they are rushed. But FINRA cuts them no slack for expedited client service.

Mr. Robert P. Gulan was a broker who registered with FINRA from 2002 to 2011. He cut-and-pasted client signatures on clients' IRA distribution requests and shredded the original IRA form. The fax didn't go through, Gulan cut signatures from another document that the clients had signed earlier and affixed the signature onto a new IRA form, resubmitting that form for processing. FINRA imposed a 30 day suspension and $5,000 fine.

Similarly, broker Arthur Apostol was sanctioned $5,000 and a three months suspension. He cut and pasted at least four customers' signatures after the customers authorized the opening of their LPL accounts. Mr. Apostol also asked customers to sign blank forms for future use.

All things considered, the three months downtime seems a bit too heavy but in both cases, the brokers chose to settle for those sanctions regardlessly.

Recruiters Vote on the Best Firms for Transition

On Wall Street’s Recruiters Roundtable had differing predictions as to whether the panel members shared their views on a host of issues, including which firms are attractive (their “Buy” List), unattractive (their “Sell” list), or neither (their “Hold” list).

Eight headhunters cast their votes. Raymond James won the most Buy recommendations (7), followed by 6 for Barclays, Ameriprise and HighTower. Most Sell recommendations were for Credit Suisse and Edward Jones (8 each), followed by Stifel Nicolaus with 7. Most Hold recommendations were given
to Hilliard Lyons (8), and second of Robert W Baird, (7).  Buy/Sell votes were even for Morgan Stanley.