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

  • 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
  • The Financial Industry Regulatory Authority (FINRA) is considering creating a fund to be used for unpaid arbitration awards. As it stands, some investors do not recover arbitration awards.According to FINRA News, a study done by the Public Investors Arbitration Bar Association revealed that in 2013 alone a total of $62 million in awards went unpaid—about one in three awards. The Wall Street Journal found that more than $34 million of arbitration awards made to investors in 2014 remain unpaid, or 15% of... More
  • Many consumers are learning the hard way that life insurance bought years ago is much more expensive and more risky than anticipated.The Wall Street Journal reported here that a number of major insurers are "breaking a long-standing industry taboo of raising rates on life-insurance policies."   According to the Journal, tens of thousands of people have been notified that they face rising costs, from single digits to as much as 200%.   Fine print buried in the policies gives insurers the right to raise costs,... More
  • As we posted earlier, the U.S. Department of Labor, which regulates tax-advantaged retirement savings accounts, is holding more financial advisors to a "fiduciary standard" that requires financial advisors to put clients' best interests ahead of profits.Although the Rule will take effect in part on April 2017, with full implementation in January 2018, there are already legal challenges to it. According to BusinessWire, various entities led by the U.S. Chamber of Commerce filed a lawsuit in federal court challenging the Department... More
  • The U.S. Department of Labor, which regulates tax-advantaged retirement savings accounts, is holding more financial advisors to a "fiduciary standard," which requires financial advisors to put clients' best interests ahead of profits. A new set of rules regulates any investment advice that is a recommendation to a plan, plan fiduciary, plan participant and beneficiary and IRA owner for a fee or other compensation, as to the advisability of buying, holding, selling or exchanging securities or other investments, including recommendations as... More
  • The big players in the securities industry have deep pockets and can afford to settle or pay securities arbitration awards when the lose.  But a recent report shows that there a plenty of small brokers who either can't or won't meet their obligation to pay customers harmed by their misconduct.  Unlike other licensed professionals brokers are not required to carry insurance and their firms may have surprisingly little cash or other assets available to satisfy claims.A recent report by the Public... More
  • Earlier this year, USA Today reported that FINRA suspended a record number of brokers in 2015, but the FINRA chairman, Richard Ketchum, responsible for the crackdown is retiring.  A review of FINRA statistics, including data on investor protection, shows that FINRA got results more or less on par with 2014.  In 2015, 492 brokers were barred from Wall Street. That compares with 481 brokers barred in 2014, only eleven fewer.  In 2015 FINRA levied fines of $93.9 million.  That compares with $134 million... More
  • Anyone who has done much securities arbitration work knows about FINRA's mediation program, and of course mediation can be arranged directly by the parties without involving FINRA.But what about mediation of discovery disputes?  This emerging field invokes mediation for use in discovery of electronically stored information, sometimes referred to as e-Mediation.  The potential benefits include reducing motion practice and fights over discovery, particularly over electronically stored information.  That can save time and money.  Such mediation can be issue based, not... More
  • I'm sharing a few observations on FINRA's dispute resolution statistics (through October, 2015), which are worth a look here:  80% of cases mediated through FINRA in recent years are settled;15% fewer customer cases were filed in 2015 as compared to 2014;the average time to hearing is 17.6 months, but about half that time in simplified decisions (for smaller cases);breach of fiduciary duty is the #1 type of controversy in each year form 2011-2015;municipal bond funds have been the #1 security in... More
  • On July 27, 2014 New Hampshire’s Governor signed into law a new Uniform Securities Act. The new Act repeals and replaces New Hampshire’s current Uniform Securities Act which is based on the 1956 model securities act. The new Act is based on the Uniform Securities Act of 2002, drafted by the Uniform Law Commission of the American Bar Association, which is a model statute designed to guide each state in drafting its state securities law.The new Act goes into effect... More