New England Securities Litigation & Arbitration Law 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) 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
  • FINRA’s Board of Governors recently voted to move ahead with two key initiatives for broker-dealers. One initiative would amend codes of arbitration to make it tougher for brokers to erase black marks from their public record. The proposal, which will be submitted to the SEC for approval, would incorporate existing guidance and best practices into the rules. The guidance reminds arbitrators that expungement is “an extraordinary remedy that should be recommended only under appropriate circumstances” and that “customer dispute information... More
  • Are some investments so risky that they are virtually always unsuitable -- they should never be recommended -- to typical retail investors, regardless of risk tolerance?   Yes.  The purpose of this post is not to generate a list, but to focus on one particular investment that seems to fall into this category: non-traded real estate investment trusts (REITS).According to a recent article, Fiduciary Duty and Non-Traded REITS by Craig McCann, non-traded REITS performed about as well over the past 25 years as "investing in... More
  • I offer helpful information from the "Pocket Guide for Legal Professionals, Elder Investment Fraud & Financial Exploitation" published and distributed by the Maine Office of Securities.Asking About Financial Capacity -- Conservation Starters:Do you feel confident making financial decisions on your own?Who manages y our money day to day?  How is that going?Are you having any trouble paying your bills?Is anyone pressuring you to give them money?Do you receive a lot of solicitations by phone or mail?Red Flags for Financial Exploitation:Senior... More
  • The SEC’s Office of Compliance Inspections and Examinations (“OCIE”) recently issued a “Risk Alert” highlighting deficiencies in broker-dealer supervision and compliance controls over retail Structured Securities Products (“SSP”) sales. SSPs are securities, often issued as corporate obligations of an affiliate of an underwriting broker-dealer. They derive their value from, and provide exposure to, a variety of underlying asset classes such as a single security, baskets of securities, indices, options, commodities, and/or foreign currencies. SSPs, which may or may not be... More
  • Arbitration is typically "private" in the sense that there is no First Amendment right of the public to access to arbitration hearings or arbitration documents, but that doesn't mean that arbitration is strictly confidential either.  Just the opposite, confidentiality in arbitration is the exception not the rule, according to guidance available from FINRA here.While arbitrators and FINRA staff have an obligation to "respect the privacy of the parties before whom they serve" and not to "personally disclose the details of... More
  • The Consumer Financial Protection Bureau’s Office for Older Americans and the Securities and Exchange Commission’s Office of Investor Education recently issued a bulletin to help investors and consumers understand the potential impact of diminished capacity on their ability to make financial decisions and to encourage investors and consumers to plan for possible diminished financial capacity well before it happens.The advisory bulletin makes the following recommendations to help avoid or minimize problems: (1) organize your important documents (this includes bank and... More