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BrokeAndBroker.com Blog by Bill Singer Esq WEEK IN REVIEW

September 26, 2020

http://www.brokeandbroker.com/5450/aegis-frumento-insecurities-tzero/
Overstock began selling discount home furnishings. It still does, just like Amazon still sells books. But about 6 years ago, Overstock began slowly to morph into a cryptocurrency enterprise. In 2014, it was the first major retailer to accept payment in bitcoin. tZero, its alternative trading system for institutional transactions in securities, facilitated the first recorded trade in a registered cryptosecurity in 2016. For that matter, Overstock itself issued its Preferred Digital Dividend Shares at cryptosecurities. The creation of a retail broker-dealer subsidiary to allow non-institutional traders to buy and sell cryptosecurities is the next logical step in filling out a cryptosecurities ecosystem. 

SEC Reforms Its Whistleblower Program (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5449/sec-whistleblower/
In 2015, I earned the distinction of representing the first in-house compliance officer to whom the SEC issued a whistleblower award, which was over $1 million. My client risked a long-standing industry career after realizing that the firm's management knowingly implemented a fraud upon the regulatory community designed to cover up serious misconduct. Sadly, my interaction with the SEC's Office of the Whistleblower was horrific notwithstanding that my client ultimately enjoyed a much-deserved reward. Despite the significant personal and professional risk incurred by my client in reaching out to the SEC, the whistleblower was largely responded to by OWB with an attitude of dismissiveness bordering on hostility. That was in marked contrast to the professional interaction with the Enforcement staff handling the underlying investigation. Thankfully, the SEC has taken steps to reform some of the shortcomings of its whistleblower program.

http://www.brokeandbroker.com/5448/finra-discovery-larson/
As with so many things in life and regulation, this one is all about nuance. We have a largely unsympathetic respondent, who does not seem to have had a firm grip upon his compliance obligations. Accordingly, FINRA filed charges and its staff seems to have done a commendable job making the counts stick. On top of that, we have persuasive decisions from FINRA's Office of Hearing Officers and its National Adjudicatory Council. As with all great beauties, however, there is a flaw. The flaw in this regulatory matter is FINRA's violation of its Discovery rules. A pro se respondent was asked to respond to Enforcement's misconduct at a time when the challenge would have proven immense for a veteran industry lawyer. In the end, someone has drawn a mustache on the Mona Lisa.



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