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SEC Proposes New Exemptions to Expand the Scope of "Finders"
By Robert R. Boeche II, Esq., of Shustak Reynolds & Partners, P.C. posted on Tuesday, November 17, 2020.
In October 2020, the U.S. Securities and Exchange Commission (“SEC”) proposed an order which could expand when/what “finders” are permitted to receive as compensation without registering as a broker. [...] Read More
JPMorgan Loses FINRA Claim Against Departing Representatives
By Joseph M. Mellano, Esq. of Shustak Reynolds & Partners, P.C. posted on Friday, October 30, 2020.
On October 22, 2020, a panel of FINRA arbitrators rejected claims brought by JPMorgan against three registered representatives–Nathan Shields, Mark Obrzut, and Jackson Stewart–who left the JPMorgan for Raymond James in 2018. [...] Read More
Financial Advisors on the Move Despite the Pandemic
By George C. Miller, Esq. of Shustak Reynolds & Partners, P.C. posted on Tuesday, October 20, 2020.
In our March 2020 post, published soon after stay-at-home orders were issued across the country, we hypothesized that the pandemic could present a unique opportunity for financial advisors seeking to transition from one firm to another. As it turns out, the number of advisors who have changed firms in 2020 is not all that different from years past. After an initial decline in mid-March, advisors have been moving at an increasing pace throughout the year. According to a Financial Advisor IQ article, the “game of musical chairs” continues, and advisor transitions have now returned to the same level as the fourth quarter of 2019. [...] Read More
THE BROKER PROTOCOL: NEW TREND EMERGING AS COURTS ALLOW BROKERS TO SERVICE FORMER CLIENTS?
By Sara Sabzerou, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, October 13, 2020.
Just last month, Florida federal Judge Tom Barber shot down Wells Fargo’s motion for an emergency temporary restraining order (“TRO”) against their former brokers, Brady Pedler and Joseph Santana. Wells Fargo claimed the firm would suffer “irreparable harm” due to Pedler and Santana’s solicitation of former clients to their new employer, RBC Wealth Management. Pedler and Santana managed $306 million in assets during their time at Wells. This ruling followed a similar result in Michigan, where Judge Janet Neff denied J.P. Morgan’s emergency TRO motion against a former broker who left to join Ameriprise Financial. [...] Read More
Confidentiality is a Top Priority and You Should Make It Yours, Too
By Robert R. Boeche II, Esq., Partner of Shustak Reynolds & Partners, P.C. posted on Wednesday, September 30, 2020.
The SEC and other regulatory bodies have made protecting the non-public personal information of clients a top priority. This can be seen in the multitude of rules, enforcement actions and books, and records requirements imposed upon registrants in the past few years. [...] Read More
FINRA SUSPENDS EX-MORGAN STANLEY BROKER WHO ADVISED CLIENT ON OUTSIDE TRADING
By Erwin J. Shustak, Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Monday, September 28, 2020.
It can be difficult to know whether a broker’s mistake constitutes a private securities trading violation. Some rules are clear-cut; others are not. While employed as a Morgan Stanley Wealth Management broker, Christopher Reid executed approximately 200 equity and options trades for a new client his employer previously had rejected as a potential firm client. After being rejected by Morgan Stanley, that client opened a self-directed brokerage account with another FINRA member brokerage in June 2018. The name of the brokerage firm where these trades took place was not disclosed in the Letter of Acceptance, Waiver and Consent (“Consent Letter”), which is a document commonly created through settlement of the FINRA disciplinary process. [...] Read More
SEC MODERNIZES THE ACCREDITED INVESTOR DEFINITION
By Robert R. Boeche II, Esq., Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Tuesday, September 15, 2020.
On August 26, 2020, the Securities and Exchange Commission (SEC) adopted updates to the definition of “accredited investor” under the Securities Act of 1933. Historically, only investors who met specific income or net worth requirements qualified for the accredited investor designation, which permits participation in private markets. Now, an individual can also qualify as an accredited investor based on established, clear measures of financial sophistication. Also, certain entity types that were previously excluded from the designation are now allowed. [...] Read More
Morgan Stanley’s Plans for E*Trade RIA Custody Business in Question
By Jonah A. Toleno, Partner of Shustak Reynolds & Partners, P.C. posted on Friday, August 28, 2020.
Earlier this year, Morgan Stanley announced plans to purchase E*Trade Financial Corp., with the deal scheduled to close by end of 2020. The acquisition would include E*Trade’s $360 billion in assets, $18.2 billion of which is comprised of custody business for Registered Investment Advisors (RIAs). Many wonder what Morgan Stanley, a global wirehouse firm with over 16,000 advisors who primarily engage in brokerage and commission-based business, plans to do with E*Trade’s RIA business. Unlike other, independent brokerages, Morgan Stanley does not currently permit its advisors to operate on RIA platforms. [...] Read More
CERTIFIED FINANCIAL PLANNER (“CFP”) ALERT: CFP BOARD RELEASES FINAL PROCEDURAL RULES FOR CODE OF ETHICS AND STANDARDS OF CONDUCT FOR CFP PROFESSIONALS
By Erwin J. Shustak, Partner and Andrew Steiger, Law Clerk of Shustak Reynolds & Partners, P.C. posted on Wednesday, August 12, 2020.
The CFP Board certifies and bestows the CFP designation on professionals who meet rigorous education, training, and ethics standards. In an average year, the CFP Board conducts 6,900 background checks as part of their dual mission of CFP certification and enforcement of professional standards. [...] Read More
FOLLOWING REG BI, DOL PROPOSES TO EASE RESTRICTIONS ON ADVISER COMPENSATION ON RETIREMENT ACCOUNTS
By George C. Miller, Esq. and Domanic Glenn of Shustak Reynolds & Partners, P.C. posted on Thursday, July 9, 2020.
The SEC's Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934 establishes a "best interest" standard of conduct for broker-dealers and associated persons when they make a recommendation to a retail customer of any securities transaction or investment strategy involving securities, including recommendations of types of accounts. The new rule, which formally took effect June 30, 2020, is viewed as a replacement for the Department of Labor’s (“DOL”) previous, and now dead, fiduciary rule. One of many objections from the financial industry to the DOL fiduciary rule were the significant limitations it placed on the ability to collect fees and commissions in connection with retirement accounts. [...] Read More