An irreverent Wall Street Blog
BrokeAndBroker.com by Bill Singer WEEK IN REVIEW
March 7, 2015
A registered representative put on his entrepreneur's hat and came up with what he says is a revolutionary online platform for the dissemination of promotional offers. To put it in a bit more mundane fashion, he came up with a way to tailor the creation and distribution of online coupons for goods and services. Whether it strikes you as a dramatic step forward or not, you still have to give the guy credit for taking an idea and making it into a business. In this age of enhanced Wall Street regulation, however, getting credit for improving the mouse-trap isn't always a good thing. On the way to an outside business success, a few detours are sometimes taken around industry and employer rules and regulations. In a recent FINRA regulatory settlement, the cost of innovation proved disastrous. READ
In the fiery afterglow of a nasty post-employment split, former employees and former employers are apt to do battle over underpaid or unpaid bonuses, deferred compensation, and trailing commissions/fees. In a recent example of such hostilities, a former registered person sought over $10 Million in damages and an expungement. The former employer, not happy to simply sit by and turn the other cheek, got in a few of its own shots. In the end, it seems more of a fizzle than fizz but you be the judge. READ
I frequently criticize FINRA for trying to land the knock-out punch on the industry's small fry when there isn't the same blood-lust displayed with some of the big fish. In a recent case, however, the self-regulatory organization showed commendable restraint with the imposition of sanctions against a supervisor. It's a disastrous tale of Private Securities Transactions involved in a multi-million dollar Ponzi fraud. In the end, the supervisor should be lucky that the sanctions didn't go for the jugular. READ
A potential graveyard for whistleblower claimants under Dodd Frank is 17 CFR 240.21F-4(b)(4). As set forth in the Rule, officers, directors, trustees, or partners may be deemed ineligible for an award unless the subject information was reported to the SEC more than 120 days after other responsible compliance personnel possessed the information and failed to adequately address the issue. Consider these carve-outs that render a claimant ineligible for an award. READ
EMPLOYMENT TUESDAY at BrokerAndBroker.com
Stockbroker, Compliance, Legal, and Regulatory Jobs
Few queries get my blood more agitated than those in which a client asks my thoughts about the potential acquisition of a so-called Shell Company as part of a reverse merger. The theory is that it's quicker and cheaper to get public by reverse engineering the process through the acquisition of what I often call the "walking wounded": an inactive, publicly traded company gathering dust on some far-flung shelf. This approach is less a bona fide bit of corporate structuring than a cynical wink that greets you at a darkened backdoor in some tawdry alley. READ
An opportunity presents itself for you to get involved in some business deal outside of your broker-dealer. The way you see it, your role won't be particularly active. In fact, other than setting up a corporation or limited liability company, you're probably not going to be doing much beyond some routine office management and, hopefully, cashing some paychecks. In the back of your mind, however, something is gnawing at you. Maybe you're supposed to notify your employer before moving forward? Naaah, this is only a few hours a week and it's all pretty low-key and passive. Not the kind of thing you have to notify your brokerage firm about or get its approval; and, after all, you asked around the branch and the water-cooler lawyers all said that it's no one's business when it comes to your outside business. You could have run it by an industry lawyer for a few hundred bucks but ultimately decided it wasn't worth the legal fees. Consider this recent case in which the lack of notification to the firm proved disastrous. READ