FINRA sees uptick in arbitration cases filed in first quarter
According to Q1 stats, the number of expected FINRA arbitration hearings in 2014 will exceed the 2013 number. In the first quarter of 2014 there were 1,011 arbitration cases bought before FINRA compared to only 919 last year for the same quarter. Experts had expected to see a lower amount of cases because many of the issues stemming from the 2008 crisis have been heard. However, a recent municipal bond fund issue in Puerto Rico that went bust has led to hundreds of new arbitration cases. The issue that has most frequently been a claim in 2014 arbitration cases is breach of fiduciary duty.
FINRA approves background checks for brokers
As of today, FINRA has now made it mandatory for firms to verify the info provided by a broker in the U4 upon application for FINRA registration. Firms will have to investigate candidates through public financial records and criminal records who have not been fingerprinted in the last 5 years. This is all being done so the profiles on Brokercheck reflect accurate and complete info. This measure is intended to help investors protect themselves from brokers with troubled pasts. Future additions to the U4 may include failed exams and other red flags correlated with broker misconduct.
To Tweet or Not to Tweet? The SEC Has Some New Guidance
The SEC shined some light on new guidelines regarding social media communications between investment firms and potential clients. The SEC used guidelines from paper ad rules that limit the amount of text or characters that can be used. SEC will allow hyperlinks to disclaimers in tweets as long as the text and hyperlink fit into the amount of characters available on the platform. The text must reflect link leads to important info. SEC also ruled that “retweets” of info without hyperlink is not a violation so long as “retweeter” is not an offering participant of securities.
Firms Combating Elderly Financial Abuse
Firms are now finding ways to reduce the number of problems that arise from elderly clients’ dementia or memory loss. The industry has always been rife with brokers that prey on the vulnerable, especially those in their late ages. Firms will now build compliance teams that solely deal with this problem. Advisors are training to spot signs of dementia in clients while also looking for trades in their accounts that signal abuse. Advisors are also asking children of elderly clients to be involved because the advisor alone isn’t allowed to halt trades even if he/she suspects foul play.