Eccleston Law: For Investors. For Advisors
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
Broker Transition
Transition Contract Review
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Contract Review
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
Securities Fraud
Breach of Fiduciary Duty
Retirement Planning Negligence
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact
Site Menu
About
Who We Are
Testimonials
Disclaimers
Attorneys
For Advisors
For Advisors: Overview
Broker Transition
Broker Transition Overview
Transition Contract Review
Employment Matters
State Registration Problems & Discipline
FINRA Matters
Promissory Note Matters
Team/Parnership Disputes
CFP Board Matters
FINRA Enforcement Matters
State Registration Problems & Discipline
Transition Contract Review
Broker Litigation & Arbitration
Employment Matters
Regulatory Matters
Strategic Consulting
Whistleblower Law
Promissory Note Matters
Compliance Protection
Lawyer Referral Network
Expungement of CRD/BrokerCheck Disclosures
For Investors
For Investors: Overview
Securities Fraud
Breach of Fiduciary Duty
Retirement Planning Negligence
Unauthorized Trading
Lawyer Referral Network
News & Articles
News
Articles
Financial Counsel Blog
Videos
Newsletter Signup
Contact

FINRA Chief Executive Richard Ketchum Will Focus on the Hiring of Bad Brokers and Firm Culture

Posted on May 25th, 2016 at 4:16 PM
FINRA Chief Executive Richard Ketchum Will Focus on the Hiring of Bad Brokers and Firm Culture

From the Desk of Jim Eccleston at Eccleston Law LLC:

At the Financial Industry Regulatory Authority Inc.’s annual conference in Washington, FINRA Chairman and Chief Executive Richard G. Ketchum pointed out that a broker with a worrisome background can single handedly undermine a firm’s effort to ensure compliance and establish an ethical firm culture. He also made it clear that firms that hire those brokers will be subject to more scrutiny from the regulatory authority. In an effort to help firms avoid this dilemma, FINRA is devoting more resources to use data in order to identify brokers with a record of regulatory violations and is warning firms not to hire them.

Mr. Ketchum stated sternly that, “No firm that tolerates such a concentration of ‘high-risk’ advisers should do so without expecting searching questions from FINRA as to the special supervisory steps they have taken to ensure no further bad actions.” 

In more than one FINRA announcement in 2016, the regulatory authority has informed the public that a top new exam priority will be to assess firms’ institutional cultures and whether they encourage firm employees to maintain compliance. While it is still too early to draw any confident conclusions, Mr. Ketchum said he is pleased with the initial results of the examinations. He stated that, “Many firms are paying attention to culture and managing conflicts, [but] there is still a lot of work to be done.”

In Ketchum’s opinion, the firms’ goal should be to establish a culture that puts the investor’s interests first. He suggests that it is important to eliminate “group think” and “winner-take-all” attitudes in the workplace, and importantly a “tone at the top” attitude should encourage compliance and working for the interests of the investors.

Ketchum warns that the winner take all approach creates compensation incentives that lead brokers to think about their own payouts before what is best for the clients. Firms must monitor incentive programs closely to make sure that they incentivize brokers to focus primarily on the outcomes for the client. He told reporters later that, “In those circumstances [broker payout incentives] where it results in sales practice violations, it will result in significant penalties.” While there are still lurking issues with sales practice violation, Ketchum is optimistic with the steps that member firms are taking to test compliance policy.

Mr. Ketchum has been a staunch proponent of the “best-interest” standard for brokers and he continues to support that notion. Investment advisers are already held to that standard, but brokers are still held less stringently in their suitability standard.

Reflecting on his seven years leading FINRA Ketchum said, “The challenge of how you deal with good people making bad decisions and how you try to reduce or provide direction for them to hold on to make those decisions correctly I think, in reflection, is more and more important than it’s ever been before.” 

The attorneys of Eccleston Law LLC represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

Tags: Eccleston, Eccleston Law, Eccleston Law LLC, James Eccleston, FINRA,

Share

Return to Archive

Latest Articles
Some Brokers Sold GPB Private Placements Allegedly with the Worst Wall Street Tactics
February 26th, 2021 at 1:32 PM
Carve-Out Provision Plays A Crucial Role in Morgan Stanley Advisor Transition Battle
February 25th, 2021 at 3:18 PM
Read More »
Latest News
CFP Board is the New Sheriff and it Is Not Your Friend
October 24th, 2020 at 10:04 AM
Defending Against a Customer Complaint First Requires Selecting Correct Legal Counsel
October 15th, 2020 at 10:02 AM
Read More »
Share

Request a Free Consultation

Attorneys are standing by during regular business hours. Call us now for immediate service, or complete the form below and we will contact you as soon as possible.

Your E-mail Address:
 
Chicago
55 West Monroe St.
Suite 610
Chicago, Illinois 60603
(312) 332-0000
(312) 332-0003
New York City
One Liberty Plaza
165 Broadway, 23rd Floor
New York, New York 10006
(312) 332-0000
(312) 332-0003
Boca Raton
2255 Glades Road
Suite 324A
Boca Raton, Florida 33431
(312) 332-0000
(312) 332-0003
2021 © Eccleston Law, LLC.
All Rights Reserved.
The law is continuously changing. Please do not rely on information found on this site without consulting a lawyer to determine if any recent changes in the law may have an impact.