Former First Standard Financial broker, Frank Venturelli, agreed to pay restitution of $30,000 and to serve an 11-month suspension from association with any FINRA member firm in all capacities. According to FINRA Enforcement, Venturelli engaged in excessive trading in three customer accounts between July 2016 and November 2018.
The Financial Industry Regulatory Authority (“FINRA”) filed a Complaint against Adam James Makkai alleging that he shared commissions with an unregistered former coworker. FINRA Enforcement alleged that Makkai, a former LPL Financial advisor, shared commissions with a former LPL advisor who had been terminated.
In a Regulatory Notice, the Financial Industry Regulatory Authority (“FINRA”) detailed amendments to its Membership Application Program (“MAP”) rules. The MAP rule amendments are designed to further encourage the timely payment of FINRA arbitration awards.
Stifel Nicolaus agreed to a censure and to pay $3.6 million in fines and restitution to settle alleged violations with FINRA Enforcement. According to FINRA Enforcement, Stifel failed to adequately supervise early rollovers of Unit Investment Trusts (“UIT”) and also sent letters to customers that contained inaccurate information about the costs associated with early rollovers of UITs. Of the $3.6 million sanction, nearly $1.9 million will go towards repaying customers.
Industry arbitrations filed in the first four months of 2020 increased 27% compared to the same time period in 2019, according to statistics provided by the Financial Industry Regulatory Authority (“FINRA”). Through the first four months of 2020, FINRA has had 569 industry arbitrations, compared to 447 such arbitrations during the first four months of 2019. Conversely, customer arbitration claims filed against brokerages over the first four months of 2020 have decreased by 7% compared to the first four months of 2019. Many expect that the COVID-19 pandemic eventually will lead to an increase in investor arbitrations as well.
The Financial Industry Regulatory Authority (“FINRA”) announced new rules aimed at member firms and registered representatives who have unpaid FINRA arbitration awards. Pursuant to the new rules, FINRA may deny new membership to a firm or registered representative if that rep or firm has pending arbitration claims against them in which there is a concern about payment of a potential award. Additionally, the new rule will require firms with substantial unpaid arbitration awards to submit an application for continued FINRA membership and also subject these firms to heightened scrutiny by FINRA if those firms try to shift assets, management or owners to another firm.
Former Merrill Lynch broker, Christopher M. Roumayeh, agreed to a $15,000 fine and a 21-month suspension from association with any FINRA member firm in all capacities. According to FINRA Enforcement, Roumayeh engaged in outside business activities without providing prior written notice to his firm.
The upcoming implementation of Regulation Best Interest (“Reg B-I”) has broker-dealers wondering how Reg B-I fits in with FINRA’s suitability rule. Robert Colby, FINRA’s chief legal officer, recently provided guidance on the effect Reg B-I will have on FINRA’s rules.
Merrill Lynch agreed to a censure and a $150,000 fine to settle alleged violations with FINRA Enforcement. According to FINRA Enforcement, Merrill Lynch allowed an executive to function as a principal in its prime brokerage business, despite the fact that the executive was not registered with FINRA.
The Financial Industry Regulatory Authority (“FINRA”) is projecting that its operating revenue will be approximately $868.9 million, which would be roughly equal to FINRA’s 2019 operating revenue. FINRA does expect revenue from regulatory fees to increase in 2020. Meanwhile, operating expenses are expected to increase by 2.8%. If these projections are accurate, FINRA’s expenses will exceed its operating revenue and FINRA may need to tap into its reserves, which currently sit at $210.2 million.
