New England Securities Litigation & Arbitration Blog

Preti Flaherty's Financial Services Group offers the full range of dispute resolution services when it comes to financial advisors, broker-dealers, registered investment advisors, banks, insurers, and other financial institutions, including FINRA arbitration, regulatory enforcement actions, and litigation in state and federal courts.

Recent Blog Posts

  • The Financial Industry Regulatory Authority (FINRA) recently released its 2018 Regulatory and Examination Priorities Letter (the “Priorities Letter”), highlighting topics FINRA will focus on in 2018.FINRA regulates brokerage firms doing business with the public in the United States. FINRA writes rules; examines for and enforces compliance with FINRA rules and federal securities laws; registers broker-dealer personnel and offers them education and training; and informs the investing public. FINRA provides surveillance and other regulatory services for equities and options markets, as... More
  • Through Financial Industry Regulatory Authority (FINRA) Regulatory Notice 17-42, FINRA proposes establishing a roster of arbitrators with certain training, backgrounds, or experience to handle requests to expunge customer dispute information. These arbitrators would decide expungement requests where the underlying customer-initiated arbitration is not resolved on the merits (e.g., settled) or the associated person files a separate claim requesting expungement of customer dispute information. FINRA also proposes additional changes to the expungement process, such as changes to the timeframe in which... More
  • As reported in InvestmentNews, the Public Investors Arbitration Bar Association (PIABA) issued a report asserting that certain “public governors” on the Financial Industry Regulatory Authority’s (FINRA) 24-person board serve on too many corporate boards and/or have connections to Wall Street such that they cannot represent the publicly effectively and face conflicts of interest.FINRA is a self-regulatory organization which oversees thousands of broker-dealers on behalf of the Securities and Exchange Commission (SEC). It has 13 public governors, 10 industry governors and... More
  • On September 26, 2017, the North American Securities Administrators Association (NASAA) released its annual Enforcement Report. The report is available on the NASAA website at its Enforcement Report, NASAA reported that state securities regulators conducted 4,341 investigations in 2016, and took 2,017 enforcement actions overall. These actions led to more than $231 million in restitution returned to investors, fines of $682 million and criminal relief of 1,346 years (incarceration and probation).For the second consecutive year, NASAA reported that its... More
  • A previous post discusses the high standard necessary to expunge a customer complaint from a broker's record, here.  A recent Maine case demonstrates how that standard can be met.  In an unfortunate family dispute, Ferland v. Ferland, Docket No. CV-15-292 (Aug. 2, 2017), the claimant alleged that she had loaned about $721,408 to her son (a stockbroker a/k/a registered representative), which remained unpaid, and that the broker sold her an unsuitable annuity.  The broker denied all of the allegations.  The parties... More
  • FINRA arbitrators—neutral, qualified individuals—serve as decision makers, weigh the facts of each case presented and render a final and binding decision. Arbitrators have long been classified as “public” or “non-public.” Public arbitrators are individuals who are not required to have knowledge of the securities industry, but often do. Non-public arbitrators are individuals who have worked in the financial industry or regularly provide services to brokers, broker-dealers, their customers, and others in the financial industry.  But the line-drawing exercise delineating who... More
  • What are the rules of the road with regard to broker requests to expunge customer claims from their records?  This post surveys the current standards for applicable to broker requests to remove customer complaints from their records (i.e., the Central Registration Depository or "CRD").  According to FINRA, the CRD system is "the central licensing and registration system for the U.S. securities industry and its regulators. The system contains the registration records of more than 3,790 registered broker-dealers, and the qualification,... More
  • Effective June 9, 2017 the U.S. Department of Labor’s “fiduciary rule” took effect. Anyone who handles retirement assets and gives advice (including financial professionals of all types, whether they call themselves brokers, financial advisors, financial planners, or wealth managers) must adhere to new “impartial conduct standards.” The final rule was released nearly six years after it was first proposed by the Obama administration. The rule is set up to roll out in phases. Other provisions within the rule are scheduled... More
  • In a decision that seems to draw inspiration from equal protection jurisprudence, the Supreme Court has reiterated that federal law bars discrimination against arbitration agreements.  State law rules that "single out" arbitration agreements for "disfavored treatment" violate federal law.  The opinion, Kindred Nursing Centers, L.P. v. Clark, 581 U.S. __ (2017), reinforces and strengthens a line of Supreme Court precedent making clear that arbitration agreements receive special protection by virtue of the Federal Arbitration Act and that state attempts to nibble... More
  • What Can FINRA do to curb financial exploitation by seniors?  The U.S. Securities and Exchange Commission recently (March 30, 2017) approved two steps to protect senior investors to be included in new FINRA Rule 2165 (Financial Exploitation of Specified Adults).First, firms will be required to make reasonable efforts to obtain the name and contact information for a trusted contact person for a customer’s account. Second, firms will be permitted to place a temporary hold on a disbursement of funds or... More
  • Effective January 3, 2017, the arbitrator selection process administered by FINRA changed to give parties greater choice in arbitrator selection and, by extension, a better likelihood of selecting higher ranked arbitrators.   The number of candidate arbitrators on the "public list" is increased from ten to fifteen and the number of strikes rises to six from four.   FINRA explains more about this update in Regulatory Notice 16-44, available here. ... More
  • According to FINRA, arbitration case filings in 2016 (3,681) were about 7 percent ahead of the number of total case filings in 2015 (3,435).  The number of customer disputes, which account for 70% of the total number of disputes filed, is up about 8%.  The number of intra-industry disputes is up about 6%.  FINRA nearly kept pace with this modest bump in filings by closing 4% more cases in 2016 than it had in 2015.  The turnaround time from filing... More
  • How long is too long to wait before a securities arbitration claim can be asserted?  There's no simple answer.  Many factors go into the mix in fixing deadlines, including (of critical importance) the nature of the claim.  Another factor is whether the claim is subject to arbitration. In Maine -- as in many other states -- the generally applicable deadline for filing legal claims (the statute of limitations) does not apply in arbitration.  The default statute of limitations applicable to most... More
  • On November 18, 2016, the Public Investors Arbitration Bar Association ("PIABA") Foundation posted a video that uses the recent Wells Fargo scandal to highlight that conflicts of interest are a root cause of many financial downturns and bad investment recommendations.  The video features victims as well as many securities arbitration attorneys who explain why investors are hesitant to hold their brokers responsible for bad investment recommendations and fraud: Reason #1: Investors Blame Themselves.Reason #2: Advertising Cultivates Trust.Reason #3: Investors Do Not Understand their Legal... More
  • On November 21, 2016, the U.S. First Circuit Court of Appeals issued an interesting and important securities decision involving state and federal securities fraud claims against Bank of America Securities (now known as Merrill Lynch, by merger).  The claims boils down to an allegation that Bank of America fraudulently sold tens of millions of dollars of auction rate securities ("ARS") to a large customer, Tutor Perini Corporation.The decision provides a primer on ARS, risks associated with them, and what Bank... More