Securities and Investment Blog

Conflict Management for Terminated Financial Advisors
There is plenty of room for conflict when a financial advisor is leaving his or her broker-dealer. Although the departure may start off in an amicable fashion, tensions often flare once promissory notes and client retention issues arise. Moreover, an involuntary or “for-cause” termination may implicate defamation and regulatory issues. In other words, your broker-dealer may defame you on your U-5/U-4[1] providing you with an arbitration claim but also subjecting you to months of regulatory scrutiny from FINRA and state regulators. So here is my lecture: it is wise to retain independent counsel as soon as you are even...

The SEC Chair sets the Agency’s sights on Cryptocurrencies
 On October 5, 2021, Securities and Exchange Commission Chairman Gary Gensler addressed the House Financial Services Committee regarding the agency’s role in regulating the cryptocurrency markets. His remarks regarding Congress’ need to fill the regulatory gaps in cryptocurrency markets have been criticized as confusing considering his past statements that most cryptocurrencies are securities and therefore already fall under the SEC’s regulatory scheme. Adding to the uncertainty is his refusal to stake out a clear position as to whether the two biggest cryptocurrencies, Bitcoin and Ethereum, are securities. ...

State Regulators Focus on Precious Metals and Self-Directed IRA’s
The organization of North American securities regulators recently had their annual conference. The organization is known as NASAA. During the conference presentation and panel discussion, it was reported that much attention was paid to self-directed IRA’s. The regulators believe that SDIRA’s are being used in conjunction with investment “scams.” It was reported that the regulators are anxious to work with federal legislators, but it was unclear as to what the proposed legislative solution to the alleged problem would be. In conjunction with the discussions, the regulators referenced the precious metals industry. Our...

Court Strikes Non-Compete and Non-Solicitation Provisions
 In a financial services industry dispute, the Eighth Circuit Court of Appeals recently reversed a district court's enforcement of a non-compete agreement and non-solicitation agreement in employment contracts. The appellants were a financial advisor and her new financial services firm. The appellee that lost on appeal was the financial advisor's former employer. The financial advisor was Cara Miller. When she worked for Honkamp Krueger Financial Services, she signed an employment agreement that included a non-compete and non-solicitation agreement and then an Agreement Ancillary to Employment that failed to include a non-compete...

What to do about FINRA Customer Complaints
Trust is essential for a successful career as a securities broker. FINRA’s BrokerCheck website allows the public and employers to search a securities broker by name and discover any disciplinary actions that have been issued against that broker. A BrokerCheck report also lists any formal complaints by previous investors. This system helps prevent investors from getting involved with securities brokers with a history of fraudulent and/or negligent behavior. In some instances, however, BrokerCheckcasts too wide a net, causing significant reputational harm to undeserving brokers. When a customer complaint appears on a broker’s...