The Other Shoe Falls – Jesup & Lamont Securities Files for Bankruptcy.

To anyone with a pulse and half a brain, this should come as no surprise. Jesup & Lamont Securities Corp., the poorly-run broker-dealer that swallowed up other broker-dealers, has filed for bankruptcy protection under Chapter 11. Using Chapter 11, the firm could reorganize and emerge from the other side. Frankly, it should convert to Chapter 7 and be euthanized.

There are enough broker-dealers on this earth. There are certainly plenty with the questionable reputation of Jesup & Lamont. Much of that has to do with the firm’s former management, most of whom have lost their jobs. It’s unfortunate that they’ve lost their jobs, but if they had done their jobs in the first place, like controlling the firm’s general counsel, perhaps they wouldn’t have ended up on FINRA‘s radar screen.

But all that is behind Jesup now. The firm will go through bankruptcy and, perhaps, end up being owned by the very people who hold judgments and awards against it. Wouldn’t that be ironic?

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc S. Dobin.

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Investment Advisor Representatives Face New Public Disclosure

FINRA registered representatives have faced public disclosure for quite a while. In fact, public disclosure, including time before it was on the web, has been around for close to 20 years I think.

Initially, a request was made in writing or by telephone. Then the NASD, as it was known at the time, would print out a report and send a copy to the requestor. The firm and the broker would also receive notification of the request. That has gone by the wayside. Like so many other things, the Internet has changed things.

Now, anyone who’s interested can simply log on to FINRA Brokercheck, follow the instructions and you’ll see what’s available from FINRA. Many states, Florida included, will give a requestor a copy of the broker’s complete CRD record, which is much more thorough. This worked for stockbrokers, but investment advisor representatives were a different animal.

For instance, a broker could lose his/her license and still get a job with an investment advisor. The public customer might not think to look at either the Brokercheck or CRD reports. So the broker might have issues in his/her past that would give the client a reason to move on. But without a coherent reporting system, the client was operating in a vacuum.

Things have now changed. The SEC has significantly upgraded its online disclosure system, which used to be called IARD. It is now called IARD and you, dear reader, can find it here.

Disclosure is good. On the SEC system, one can search by representative name or firm name. The reporting is not perfect, but it is much better and more extensive than it was before. So the next time a good-looking, smooth-talking, salesperson is sitting across your kitchen table pitching his/her firm’s great management abilities, get out your laptop and log on to the IAPD. Maybe you’ll find something that will make you think twice, or at least ask more questions.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin.

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