Joshua is co-editor and a frequent contributor to Securities Compliance Sentinel, a blog that provides analysis of cutting-edge securities industry issues.
Scroll down to see Joshua's most recent posts.
Recent Blog Posts
- What are you doing to prevent a data breach A broker-dealer recently agreed to pay a $650,000 fine after an OSJ’s cloud vendor failed to adequately protect customer information. Apparently, an outside hacker was able to gain access to non-public personal information about the firm’s customers. This breach and resulting fine should certainly serve as a wake-up to all firms, but, in particular, to smaller firms. These firms are those who are more likely to use outside vendors to maintain cost, but are at greater risk. If anything, this fine only... More
- Dodd What Now that the election is over, it remains to be seen whether a Trump administration will do away with Dodd-Frank and dump the Department of Labor fiduciary duty rule as promised. Come inauguration, all bets are off. The one thing for certain is that the world for securities professionals will surely be changing come January. Hold on for the ride.... More
- So Who Wants Senior Clients In its never-ending effort to thwart senior investor fraud, FINRA recently proposed a new rule to the SEC. This proposal would require member firms to obtain the name of a trusted contact person for the customer’s account. The new rule would also allow firms to place temporary holds on the disbursement of funds or securities when there is a reasonable belief of exploitation, and notify the trusted contact of such a hold. This proposed rule is consistent with the advice I... More
- A Data Breach! You Better Check The Law Of The States In Which You Have Customers Consistent with the ongoing guidance/requirements from the SEC and FINRA, all firms must have and enforce data security policies and procedures. Even the best policies and procedures may, however, not protect the firm in every instance. So what do you do if there is a breach? One of the most important things to determine is what law governs. In other words, if you have clients in all 50 states, it is possible that there are 50 different data breach laws that... More
- When just saying “no” is a good thing In the hectic world of financial services, registered representatives and investment adviser representatives are always looking to increase their assets under management. At what cost? Are there situations where you would be better off just saying no to accepting that one additional client? In my many years of defending representatives and advisers from customer complaints, the unqualified answer is yes; there are situations when you are better off just saying no. Any good risk avoidance program will provide for the proper... More
- Do you really want to hire that broker with a checkered past That is the question that the SEC has essentially posed for registered investment advisers in a National Exam Program Risk Alert. In doing so, the SEC has stated that it will be “examining compliance oversight and controls of registered investment advisers that have employed or employ individuals with a history of disciplinary events . . . .” The SEC will essentially be examining the investment advisers business and compliance practices, particularly focused on higher risk individuals. Does this mean that you... More
- Is this the first shot in the SEC’s war against social media? The SEC has repeatedly included issues around social media in its annual exam priorities for investment advisers. With the SEC’s recent release of a final rule on the subject, the SEC has taken that “exam priority” to the next level. Under this new rule, investment advisers will have to complete an additional component to their annual Form ADV filed with the SEC. In doing so, investment advisers will have to disclose their addresses for Twitter, Facebook and LinkedIn. So what’s the... More
- Who wants to chair a FINRA arbitration Every time that I start a FINRA arbitration, I find myself having the same internal debate; did we pick the right person to serve as the arbitration chair. Unfortunately, you will not know the answer to that question until after your arbitration begins, or, more likely, after the award is issued. FINRA has proposed a rule change to open up the filed for chair arbitrators. Under the proposed rule, attorneys can serve as public arbitrator chair with less experience than they... More
- Don’t argue; the client is always right even when they are not Over the years that I have defended broker-dealers and investment advisors on customer-initiated claims, I have seen many things that would make any compliance officer cringe. One spine tingling (not in the good way) type of conduct is when an advisor engages his/her client when the client makes an informal complaint, instead of routing the complaint to compliance/supervision. So why is engagement against the rules of engagement? The most important reason is that engagement (aka arguing) may only make a simple... More
- Why treating customer complaint with therapeutic neglect always fails When faced with a customer complaining through a letter or email, it is human nature to try to appease the customer with a conciliatory response or no response at all. I have seen this “human nature” all too often when defending brokers and advisor from customer complaints. In almost all instances, the complaining customer now claims that the conciliatory comment or non-response is the functional equivalent of an admission by the broker/advisor that he/she did something wrong. In turn, the broker... More