Industry Topics

FINRA’s 2016 Priorities: FINRA is Searching for Sales Practice Issues

February 11, 2016 | Malecki Law Team

Brokers beware; FINRA is watching your firm, and you. Becoming embroiled in a regulatory inquiry or investigation can become a major and costly headache and impediment to registered representatives’ business.

In January 2016, the Financial Industry Regulatory Authority (FINRA) released its annual list of priorities, showing what sorts of sweeps they may perform, and investigations they may bring, in the coming year. brokers working in the securities industry should be aware of the priorities that are relevant to them, including those having to do with sales practice.

FINRA’s 2016 Priorities make clear that they intend a top-down review of the following areas, which may lead to firm-wide or broker specific investigations, including:

SEC Announces 2016 Priorities that Involve Securities Industry Participants

February 5, 2016 | Malecki Law Team

The sad truth is that the Government loves the easy kill. It is often easier for regulators to extract settlements and punishments against smaller market participants, including brokers, traders and analysts, than the giant wire houses, because large companies can match the resources of the Government.

The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), among other regulators, regularly engage in investigations to explore, deter and punish market conduct that violates the securities laws and industry rules. While it can be hard to know what those investigations will be, the regulators like the SEC disclose regulatory priorities on an annual basis. These examination priorities are areas where the SEC will be dedicating resources throughout 2016.

Of the 2016 Priorities announced by the SEC, the following may lead to broad investigations:

Broker Transition: The Upfront Bonus/Forgivable Note

February 5, 2016 | Malecki Law Team

Thinking about leaving your broker-dealer? Looking to make the transition to a new firm?

It has been reported recently that brokers from Credit Suisse, Deutsche Bank and potentially Merrill Lynch are being heavily recruited to leave and join new broker-dealers. For those leaving Credit Suisse, Deutsche Bank, and Merrill (as it is for any FINRA registered representative) the choice to move to a new broker-dealer is not one that is made lightly. Whether a protocol move or a non-protocol move, many of the same issues remain at the forefront and need to be dealt with judiciously. One of these issues is the transition bonus/promissory note.

If you are fortunate enough to have a substantial book of business and significant gross production, you may have been offered an upfront transition bonus by a new broker-dealer. Frequently, these bonuses are awarded to reps in the form of Forgivable Promissory Notes. The basic structure of these “Notes” is as follows: The “bonus” is structured on paper as a loan. Over a set time period – usually five to seven years – the balance of the loan, including interest, is paid off or “forgiven” by the broker dealer.

A Summary of FINRA’S Regulatory Priorities in 2016

February 5, 2016 | Malecki Law Team

Recently, FINRA issued the 11th Regulatory and Examination Priorities Letter that addresses issues in the financial industry, if left unaddressed could adversely effect market integrity and investors. In 2016 their key points of emphasis have been identified as (1) culture, conflicts of interest and ethics; (2) supervision, risk management and controls; and (3) liquidity. The Letter also highlights specific policies and procedures the FINRA will use to ensure that member firms are compliant with the priorities identified.

According to Richard G. Ketchum, CEO and Chairman, FINRA, “ Firm culture, ethics and conflicts of interest remain a top priority for FINRA. A firm’s culture contributes to, and is also a product of, a firm’s supervision and its approaches to identifying and managing conflicts of interest and the ethical treatment of customers. Given the significant role culture plays in how a firm conducts its business, this year the letter addresses how we will formalize our assessment of firm culture to better understand how culture affects a firm’s compliance and risk management practices.”

Culture, Conflicts of interest and Ethics

Investor Recovery Options As Tortoise Capital Advisor Funds Suffer Losses

January 29, 2016 | Malecki Law Team

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors in Tortoise Capital Advisors and explore their potential options for recovering their losses.

The Kansas-based Tortoise Capital Advisors is a “privately owned investment manager . . . that primarily provides its services to high net worth individuals . . . and caters to corporations, pooled investment vehicles, investment companies, and pension and profit sharing plans . . . typically invest[ing] in [the] energy and infrastructure sector,” per Bloomberg Business.

Among Tortoise’s portfolio of funds, a number of them declined between 17% and 36% in 2015 alone, per Morningstar.

Jenice Malecki Featured in today’s FundFire Story Involving Morgan Stanley

January 15, 2016 | Malecki Law Team

Today, Ms. Malecki was extensively quoted in the FundFire story titled MSWM Goes to Court to Get Former FA to Pay Back Loans.

This story is focused on Morgan Stanley’s attempt to go to court to make a former advisor pay-up after FINRA arbitrator granted them a million dollar reward in a promissory note dispute case. Ms. Malecki, who has extensive and relevant experience with securities industry employment dispute cases opined that “it is common for wirehouses to pursue awards through FINRA arbitration when advisors leave the firm but don’t repay outstanding promissory notes” and this happens more often when markets are bad. The detailed story is available on the FundFire website at http://bit.ly/1ZAPssh

Malecki Law Investigating Oil and Gas MLP Losses

January 12, 2016 | Malecki Law Team

Oil briefly dropped below $30 per barrel today. For those who drive SUVs, this may feel like a blessing. However, for those who are heavily invested in Oil and Gas, it can be frightening. People who invested in Oil and Gas at the recommendation of their financial advisor may be feeling anger and confusion, in addition to that fear – these investors rightfully want answers.

Aside from buying Oil and Gas futures directly, there are two frequently used products that investors use to invest in Oil and Gas – Master Limited Partnerships (MLPs) and Exchange Traded Funds (ETFs).

As we wrote here last year, investors lost millions as gas prices dropped at the beginning of 2015. As prices have continued to slide over the past 12 months, losses have compounded. This is terrible news for those whose financial advisors recommended that they invest in Oil and Gas, and then convinced them to stay in and “ride it out” on promises of a price recovery.

Jenice Malecki on Bill Singer’s Show Today

November 24, 2015 | Malecki Law Team

Watch Jenice Malecki’s interview with Bob Singer on Case In Point, a weekly segment in Wealth Management. In this segment, Ms. Malecki speaks about the rise of elder fraud exploitation and responsible steps that financial industry professionals can take to protect seniors. Ms. Malecki, the owner of Malecki Law is known for spreading legal awareness on this topic and championing the rights of elderly investors through the media, speaking engagements, legal articles and community outreach. She is pleased to be on Bob Singer’s show today, known for his contributions to Wealth Management and his own blog BrokeandBroker, sending the message out to his financially astute audiences.

CLICK HERE to watch Ms. Malecki’s video.

This Week At Malecki Law

November 20, 2015 | Malecki Law Team

The experienced Securities attorneys at Malecki Law managed to secure a major win on behalf of one of their international clients. They managed to secure a summary judgment dismissal for a Chinese businessman, a well-known inventor and public figure in China, who was being sued in excess of $30 million for being the controlling shareholder of a company that went out of business. The opposing counsel was Weil, Gotschal & Manges LLP.

Today, Ms. Jenice Malecki is the Chair at a FINRA mock arbitration for St. John’s students. She has actively mentored students over the years from different law schools through lectureships and speaking engagements.

Elder Fraud Week at Malecki Law

October 30, 2015 | Malecki Law Team

Jenice Malecki taped a session on elder financial fraud for Case In Point with Bob Singer , Bob Singer’s weekly segment in Wealth Management. He is a veteran Wall Street lawyer, a weekly contributor to Wealth Management, and known for his own blog BrokeandBroker. Jenice Malecki was a guest on his show this week, where she shared her insights on matters related to diminished capacity, the elderly, and Securities Law. Over the years, Ms. Malecki has been televised widely on Securities industry related topics. Stay tuned for this video on our blog.

Earlier this week, Adam Nicolazzo and Robert Van de Veire visited the Hudson Guild Senior Center to educate their members about Elder Financial Exploitation.