An irreverent Wall Street Blog
BrokeAndBroker.com by Bill Singer WEEK IN REVIEW
April 4, 2015
Supposing that you go to the nearby grocery store and buy a bunch of stuff and, oops, you realize on the way home that you had inadvertently put a package of gum in your pocket and forgot to pay for it. Now, assume that you're a stockbroker. Now, also assume that the owner of the grocery store is a customer of yours. Do any of the facts above suggest that your conduct should fall under scrutiny of one of Wall Street's regulators? Sure . . . maybe it's a criminal matter for a local prosecutor. Maybe it's something to be worked out between you and the customer/store-owner. How does it escalate into a regulatory case? Setting aside my hypothetical pack of gum scenario, consider today's BrokeAndBroker.com Blog and ask yourself how the transaction wound up before FINRA -- and is this the best allocation of Wall Street's limited regulatory resources? READ
In practice, public companies have conducted internal investigations when presented with information or complaints about potential misconduct. These in-house efforts serve a number of purposes and agendas. In its purest form, the motivation behind an internal investigation is to ferret out misconduct and give the company an opportunity to right wrongs and implement better compliance practices. In practice, such internal reviews are often used to see what a prosecutor or regulator might find and then send the plumbers in to quickly and quietly repair the damage before it comes to wider light. In some instances, a point (or some would argue "the" point) of an internal investigation is to bring a complaining employee into an intimidating scenario replete with unsmiling lawyers, several documents requiring multiple signatures, and a sense that it would have been best if you had just kept your mouth shut.
Across the spectrum of firms trying to do the right thing internally through trying to intimidate a complaining employee, a practice developed of having those involved in the in-house investigation sign a confidentiality agreement that required the prior approval of the firm's General Counsel before you could discuss the ongoing inquiry with any third party. As you may well imagine, sometimes the purpose behind that document was to protect trade secrets -- and, just as obviously, it was a way of keeping those who knew things from blabbing to the press and the government. Alas, all good things must come to an end. READ
On March 31, 2015, the Department of Justice announced that it had issued a new policy to restrict the use of asset forfeiture in structuring offenses. This shift in tactics was likely prompted by growing media reports of abuses that particularly victimized legitimate, small business owners who had made cash bank deposits in amounts under $10,000. Although the government's approach of seizing assets perceived to have been used in illegal banking transactions was anticipated as an effective pre-emptive method to hinder growing efforts to circumvent currency reporting and to further illegal money laundering, the uneven application of the seizures came off as heavy-handed and immune to reasonable appeals for a prompt release of seized funds. READ
At first blush, the FINRA AWC discussed in today's BrokeAndBroker.com Blog seems a commendable effort by FINRA to delve into matters involving a victimized elderly brokerage customer. On further review, however, the regulatory settlement doesn't actually involve a customer (or it does, or it doesn't, or . . . you'll see later) and the age of the elderly individual comes off more a lurid point than anything material to the charges. Finally, the Respondent in this matter apparently represented herself, and the lack of a lawyer may have contributed to the puzzling mess that confronts us. READ
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For 20 years, one registered person timely and fully disclosed her outside business activity to her employer FINRA member firm. Inexplicably, a few years ago, she apparently embarked upon another outside business but failed to notify her firm -- that proved a costly lapse. Today's BrokeAndBroker.com Blog examines the ensuing regulatory settlement involving her failed disclosure. READ