BrokeAndBroker.com Blog by Bill Singer WEEK IN REVIEW
March 28, 2015
In today's BrokeAndBroker.com Blog, we have what I often refer to as a "yes, but" case. I'm sure you have encountered such ambivalence with many matters in your life. You get it why something was wrong. You may even agree with the punishment. On the other hand, your mind seems to prod you with "however" and "but," and you're left uneasy. Consider this recent FINRA AWC settlement in which a registered person is suspended by the self-regulator in 2015 for a 2011 loan made by a friend. READ
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Wall Street is supposed to be protected by smoke detectors in the form of endless amounts of rules and regulations, massive volumes of written supervisory procedures, and a legion of regulators and in-house compliance staff. Of course, as with all such alarm systems, you have to make sure that you take the damn device out of the box, put the batteries in, and properly install it in the right location. History suggests that this has not always been the case for the financial services community. Consider this recent regulatory settlement in which you have to wonder just what the hell was or wasn't going on in terms of detecting and responding to warning signs. READ
In the great 1967 film "Cool Hand Luke," we get that iconic line about "What we've got here is failure to communicate." The scene involves the beat-down of a prisoner, played by Paul Newman, by a prison Captain, played by Strother Martin. In 2015, in a Securities and Exchange Commission case, we have a more droll example of the communication admonition. In these more modern days, it appears that a convicted felon's mail just can't seem to find him. All of which brings to mind the other bit of dialog by Strother Martin in that same iconic scene, "Some men, you just can't reach." READ
Customer Wins $378,000 in Ultra Short ETF Lawsuit
Consumer advocates and regulators tend to dislike so-called "exotic" or "leveraged" Exchange Traded Funds ("ETFs"). Many of the concerns are legitimate; however, too often the criticism demonizes the product rather than the laziness and stupidity of those who invest without an understanding of what they're buying. In contrast to the naysayers, professional traders and savvy amateurs often love a number of the unusual ETFs. No matter where you come down on the debate, there is simply no excuse for a lack of due diligence before investing -- and there should be no tolerance for any brokerage firm or stockbroker who fails to fully explain to a customer the risks of any recommended investment. Consider this recent FINRA arbitration case in which a customer sues a former brokerage firm and stockbroker over losses from one such ETF. READ