An irreverent Wall Street Blog
BrokeAndBroker.com Blog by Bill Singer WEEK IN REVIEW
February 11, 2017
WARNING! Today's BrokeAndBroker.com Blog reports about a Securities and Exchange Commission case against a medical marijuana company. This story includes discussion of drugs and drug use, and contains obscene language and disturbing depictions of drug use and drug users. If you are easily offended, please do not read beyond this point. Readers of today's article may experience dizziness, nausea, projectile vomiting, constipation and a four-hour erection. READ
Today's BrokeAndBroker.com Blog covers a fairly mundane bit of self regulatory esoterica in the form of a FINRA member firm's failure to update its Membership Agreement. As esoteric as the issue is, however, there are aspects of the regulatory settlement that raise questions: What is meant by "relevant" and who gets to make that determination? Then there's that bit of hypocrisy on the part of FINRA that renders the settlement as more than a bit . . . hmmm . . . what's the word that I'm looking for . . . oh, yeah . . . hypocritical. READ
Real Estate Flipper Sued For Investment Fraud
Flipping real estate is all the rage. If you have nothing else to do, spend a few hours watching all the flipping shows on cable. Flip this. Flip that. Flop the other. It's hilarious when some idiot budgeted $20,000 on a ramshackle mess and is then shocked -- shocked, I say -- to learn that the foundation has termites, the chimney needs to be rebuilt, the roof leaks, and the wiring hasn't been up to code for several decades. Then we go to commercial. Then we come back to the hosts rescuing the project. Scene, camera, and action! It's all so real but for the fact that the house should be condemned, the home inspection guy sued, and the flippers would typically lose every cent of their investment, wind up owing the contractors, get foreclosed upon by the bank, and find themselves owing lots of fees and taxes. Ain't flippin' fun?
In today's BrokeAndBroker.com Blog we consider an entrepreneur -- I mean, you know, almost everyone who is involved in any business venture on TV these days is called an "entrepreneur." Any how, we got our entrepreneur, who got his hands on about $1 million from far too many gullible investors, who ponied up the bucks for unsecured promissory notes. Yeah, "unsecured," as in "are you nuts?" And what was the irresistible spiel from our entrepreneur? You guessed it: He's gonna flip the investment funds from the notes into big bucks after selling the renovated properties for a profit. At first, you would have apparently invested through a company already in the flip biz; but later, when our entrepreneur seems to have figured out the angles, our investment genius goes out on his own. READ
Google Subpoena Withdrawn In Brummer V. Wey Defamation Case
Today's BrokeAndBroker.com Blog updates "Subpoena Served On Google In Brummer V. Wey Defamation Case" (BrokeAndBroker.com Blog, January 31, 2017), which reported on the January 11, 2017, and November 16, 2016 Subpoenas served on Google by Plaintiff Brummer. Plaintiff is a law professor at Georgetown University Law Center and served on the Financial Industry Regulatory Authority's National Adjudicatory Council ("NAC") from 2013 to 2015. Christopher Brummer, Plaintiff, v. Benjamin Wey, FNI Media LLC, and NYG Capital LLC d/b/a New York Global Group, Defendants (Amended Complaint, Supreme Court of the State of New York, New York County, File No. 153583/2015, January 13, 2017). READ
Jay B. Gould, Esq., Partner, Winston & Strawn LLP, reminds us that under Dodd Frank, the SEC was supposed to have considered and proposed its own fiduciary rule that would have covered all "financial advisers" that touch retail customers, not just investment managers of retirement accounts. That review was supposed to have considered whether broker dealers who service retail customers should be held to the same fiduciary standard as investment advisers. But due to partisan squabbling, the SEC was never able to get anything done. President Obama then ordered his Labor Department to move ahead separately from the SEC mandate so that at least the retirement assets of Moms and Pops would be subject to the higher fiduciary standard. Gould believes that Dodd Frank cynically suggests that some brokers only care about generating commissions for themselves and do not always have the best interests of the client at heart.
The recent action by the new administration was announced at or around the same time as another Executive Order was signed that would require two rules to be eliminated for every new one that is adopted. This two for one math will ostensibly be measured by economic impact. So, if we are eliminating regulations, ameliorating the adverse economic impact of rules and (in the case of the SEC) adopting or amending rules that will accelerate economic growth and capital formation, In today's BrokeAndBroker.com Guest Blog, Gould offers a few suggestions for the incoming chairman of the SEC. READ