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The Securities and Exchange Commission today proposed new rules and amendments to enhance disclosure and investor protection in initial public offerings by special purpose acquisition companies (SPACs) and in business combination transactions involving… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. A Wells Fargo broker who traded a client’s account after he died was fired and sanctioned by FINRA. According to FINRA, the broker was terminated from Wells Fargo “after internal review revealed that advisor entered stop loss orders in account of deceased customer, per prior discussion, not knowing client was deceased.” FINRA found that doing so violates FINRA Rule 2010, requires associated persons, in the conduct of business, to “observe high standards of commercial honor and just and equitable principles of trade.” Of course, unauthorized trading is a serious violation, and one which merits investigation and when proven, significant sanctions. However, in this case, according to the consent order, the broker was placing stop loss orders, in a managed account. A stop-loss is designed to limit an investor’s loss on a security position that makes an unfavorable move. Once the stock’s price hits the set price, the order converts to a market order. Stop loss orders are accepted and widely used orders. While there was no financial gain for the broker in entering the unauthorized trades, the fact that he entered false information into the firm’s customer note system, and then altered that false information later, should be a serious violation. Plus, entering trades in a client’s account without speaking to him is simply foolish. The broker was suspended for three months. No fine was imposed, since he had filed for bankruptcy. The AWC (the consent order) is here. From: Me (Asdvf@234.com) I thought you might be interested in this. FINRA Rule 4111 – Knock-out Blow from FINRA? | Foreside – JDSupra https://www.jdsupra.com/legalnews/finra-rule-4111-knock-out-blow-from-7474837/ Faraday Future Intelligent Electric Inc. (NASDAQ: FFIE) filed a Form 12b-25 notifying the Securities Exchange Commission that the Company is unable to file its Annual Report on Form 10-K for the year ended December 31, 2021 (the “Form 10-K”) within the prescribed time period, and does not expect to file it by the extended filing date pursuant to SEC Rule 12b-25, as a result of delays related to internal investigation work and remediation efforts. On February 1, 2022, the Company filed a Current Report on Form 8-K (the “February 1 Form 8-K”) disclosing, among other things, that a special committee of independent directors of the Company (the “Special Committee”) had completed a previously announced independent investigation into allegations of inaccurate Company disclosures. Since then, the Company continues to implement the appropriate remedial actions approved by the Special Committee and continues the additional investigative work and remedial work as recommended by the Special Committee, under the direction of the Executive Chairperson and reporting to the Audit Committee of the Company’s Board of Directors. That work may result in further findings and remedial actions. The Securities and Exchange Commission’s Division of Examinations today announced its 2022 examination priorities, including several significant areas of focus and many perennial risk areas. The Division will focus on private funds, environmental, social… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. As the proposed class action complaint against Morgan Stanley for its deferred compensation program winds its way through the Courts, former Morgan Stanley brokers are asking if they are better served by filing their own claims in arbitration. In many cases, the answer is yes. The proposed class action was filed in New York in December 2021. As of today, March 30, the defendants have still not filed an answer, after three months. The Morgan Stanley defendants instead filed a motion to compel arbitration, arguing that the claims need to be heard in a FINRA arbitration. While the parties wait for the judge to decide the motion, the case is stayed. Nothing is happening. If the case had been filed as an arbitration, by now arbitrators would have been appointed, and a hearing date set, probably for December 2022. While there are numerous reasons to file this case as a class action, there are always issues with class actions, and issues with bringing cases in court. Most of those issues are time and money. I have represented parties in sophisticated federal court litigation, and in hundreds of FINRA arbitrations. There is no doubt that court is better for some cases, particularly where extensive discovery is needed from the other side. Arbitration just isn’t the forum if you need lots of documents or testimony from the other side. However, the Deferred Compensation cases are based on documents we already have – our client’s compensation reports, and the plans themselves. Arbitration is at least as fair as court, and certainly more expeditious. Brokers realize that and we are receiving calls from former Morgan Stanley brokers whose deferred compensation was withheld when they resigned from Morgan Stanley. We are interested in speaking to other former Morgan Stanley brokers, as well as former Wells Fargo brokers regarding their experience with the deferred compensation programs. Call our firm at 212-509-6544 or email us at mja@sallahlaw.com.We represent advisors in all 50 states. We are investigating claims for Morgan Stanley advisors who were denied their deferred compensaton payments when they left the firm. There is a proposed class action pending, but individual advisors may be better served by bringing their individual claims as FINRA arbitrations. We are reviewing claims for a number of former Morgan Stanley advisors, and are interested in speaking to others who have been denied compensation. The U.S. Securities and Exchange Commission is hosting a free virtual outreach event entitled, Safeguarding the Golden Years: Avoiding Financial Fraud, on Thursday, March 31, 2022 to help educate older adults and their caregivers on the unique challenges… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The Securities and Exchange Commission today announced insider trading charges against three software engineers employed at Twilio, Inc., a San Francisco-based cloud computing communications company, and four family members and friends for allegedly… Have a securities law question? Call New York Securities Lawyers at 212-509-6544. The Securities and Exchange Commission today proposed two rules that would require market participants, such as proprietary (or principal) trading firms, who assume certain dealer functions, in particular those who as act as liquidity providers in the… Have a securities law question? Call New York Securities Lawyers at 212-509-6544.
Category Archives: SEC Enforcement
SEC Proposes Rules to Enhance Disclosure and Investor Protection Relating to Special Purpose Acquisition Companies, Shell Companies, and Projections
Broker Didn’t Know His Client Died
FINRA Rule 2010
Unauthorized Stop Loss Orders
So, there is no financial motivation for the broker, and the only reason he would be doing this is to protect his customer’s positions.
Falsifing Firm Records
Making matters worse, FINRA also found that on April 8, 2019, he entered a note in the firm’s electronic customer note system falsely indicating that he had spoken with the customer in connection with the stop loss orders. This was not possible as the customer had died in March. On May 15, 2019, after learning of the customer’s death, he edited the original note to inaccurately state that his conversation had occurred in January 2019. Therefore, he violated FINRA Rules 2010 and 4511 in that he falsified firm records.
FINRA Rule 4511
FINRA Rule 4511 requires member firms and associated persons to “make and preserve books and records as required under the FINRA rules, the Exchange Act and the applicable Exchange Act rules.” Inherent in that obligation is the requirement that the books and records be accurate. A registered representative who falsifies firm records causes the firm to maintain inaccurate books and records in violation of FINRA Rules 4511 and 2010.
No Gain, Lots of Pain
You Should See This Document on JD Supra.
Faraday Future Delays Form 10-K Because of SEC Investigation
SEC Division of Examinations Announces 2022 Examination Priorities
Morgan Stanley Brokers Opt Out of Deferred Comp Class Action
Delays in Court Cases
Court vs. Arbitration
More Information
Morgan Stanley Deferred Comp Claims
Give me a call at 212-509-6544, we represent advisors in all 50 states.
SEC to Host Free Virtual Outreach Event to Help Older Adults and Their Caregivers Avoid Financial Fraud
SEC Charges Seven California Residents in Insider Trading Ring
SEC Proposes Rules to Include Certain Significant Market Participants as “Dealers” or “Government Securities Dealers”