On Wall Street agrees with me.

So I haven’t written in a while.  I apologize to the three people who actually read my blog.  But this struck me.  On Wall Street magazine recently posted an article discussing the wisdom of firing clients.  I wholeheartedly agree.

I’ve tried so many cases and handled so many more.  Like a disintegrating marriage, there are frequently signs that a broker’s relationship with a client is deteriorating.  Phone calls don’t get returned.  The client doesn’t respond in the usual manner to seminar invitations.  The client becomes more demanding, including demands for significant commission discounts because of account performance.  These are all signs.

It is not unusual to hear from a broker, during the course of an arbitration proceeding, “I should have fired the client, but I did not want to make him/her angry.”  Well, by that time it’s too late.  And it doesn’t matter.  Once a client has decided that the broker is the enemy, no amount of being nice is going to repair the relationship.  As Queen Else sings in Frozen, let it go.  A broker will lose more money and time trying to retain an unhappy client rather than simply showing the client the door, politely of course.

That’s the view of one lawyer from sunny and unseasonably warm Jupiter, Florida.  I’m Marc Dobin.

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Merrill Lynch fined for late U5 filing

The U-5, the Uniform Termination Notice, is an important part of the information flow in the securities industry.  When a Registered Representative leaves a firm, a U-5 must be filed.  The firm has 30 days to do so.  Most firms have procedures in place to timely file a U-5.

Merrill Lynch, I am sure, has such procedures.  But those procedures were apparently missed when it came to a Missouri broker named Greg Campbell.  The firm received two complaints alleging theft from customer accounts.  Firms do not tolerate theft from customer accounts.

But when Mr. Campbell left Merrill Lynch and joined LPL, it took the firm a year to notify FINRA of the complaints.  That led to Campbell’s termination at LPL.  But I am sure that LPL would not have hired him in the first place had they known about the complaints.  And that would have avoided $500,000 of theft, the amount reported by the Wall Street Journal that was stolen from LPL customers.  This is on top of the $1.7 million stolen from Merrill Lynch customers.

I have seen situations like this before.  I’m wondering if LPL will go after Merrill Lynch for its failure to timely report, arguing that had Merrill Lynch reported the two complaints, LPL would not have hired the thief and not paid out $500,000 in restitution.  I guess we’ll see.  But it will be in arbitration, so maybe we won’t see unless a decision is reported.

That’s the view of one lawyer from beautiful Jupiter, Palm Beach County, Florida.  I’m Marc Dobin and I’m looking at blue skies outside my window.

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Embezzling broker gets 51 months for his crimes.

OK, so it’s been a while.  What with Thanksgiving, Hannukah, Christmas, New Years and a family trip, I wasn’t that focused on sharing my thoughts with the world.  But today something struck me.  On Wall Street reported that a broker in Washington state was sentenced to 51 months for embezzlement.  How he did it was interesting to me.

First, he was barred from the securities industry and fired by LPL.  Then he convinced his clients (the article was silent on how) to move their accounts to TD Ameritrade.  He then kept their usernames and passwords so he had access to the accounts at any time.  Then, when TD Ameritrade got wind of a potential problem, they barred him from doing business with them.  For some of the victims, this flag wasn’t red enough.  They believed him when he told them that TDA was trying to force him to join their firm.  So the true believers moved their accounts to Etrade where the thievery continued.

This guy had a record.  It could be found on Brokercheck.  But it appeared that the victims didn’t look or didn’t care.  FINRA and the regulators have focused large amounts of time and energy on making sure that Brokercheck is accurate and extensive.  But do people use it?  I think a very small percentage.  I would be surprised if it’s more than single digits percentage-wise.  Instead, it is used by recruiters, lawyers and others in industry (including brokers competing for an account).  The Brokercheck system has been around in one for or another for 25 years (it used to be hard copy).  How much fraud and theft has this really stopped?  I’ll bet it costs more to run the system than the sum of the avoided losses.

So now that he’s been sentenced, he’s truly sorry.  Sorry that he caused pain or sorry that he got caught?

On a small world note, I know the judge.  Judge James Robart was a securities lawyer in Seattle back in the day.  He was a smart guy and a good person.  He said, “This is a crime of greed — pure unadulterated greed — plain and simple.”  He’s right.  Unfortunately, I think that some of the victims of this theft will have difficulties that will last far beyond the 51 months this guy is in jail.


That’s the first view of 2015 by one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.


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Welcome to Anthony Aiello at Laidlaw & Company (UK) Ltd, the latest cold call cowboy.

Today’s entrant in the cold caller race is Anthony Aiello.  Anthony hails from New York, of course, and works for Laidlaw & Company.

Anthony tried to remind me of a phone call we had “last April” where he supposedly gave me a stock recommendation.  He didn’t give me any such recommendation and we had no such conversation.

Interestingly, he claims to have notes where he wrote down that we spoke.  Even more interesting is that he didn’t work for Laidlaw then, he was with another firm.  He didn’t tell me “I was with another firm, then, maybe you remember that firm” or anything of that nature.  He just flat out told me about a conversation that didn’t happen.

It boggles my mind that FINRA allows these people to have licenses.  They’re so busy worrying about the big splashy headlines that they ignore the hand-to-hand combat that takes place over the phone all over the country.  Someone is training these cold-callers that it is OK to make things up during a conversation.  How is that proper?  Or do these guys (haven’t had a woman cold-caller yet) simply decide that the mark on the other end of the phone is too busy to remember what conversations they had 9 months ago?  Incredible.

As regular readers of this blog know, Anthony is not the first cold caller and I doubt he will be the last.  Maybe he’ll learn from this encounter and decide to make money in an ethical manner.  After all, he only graduated from college in May 2012.  I have socks with more experience.

That’s the “you interrupted my lunch for this?” view of one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.  Don’t call me.

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Yet another cold call cowboy, Patrick Rusci

Or as his mother and father called him, Praxedes Russi. Now I am sure that Praxedes is a difficult name to use while cold calling, so I don’t fault him for using Pat, but when I asked him to spell his last name, he spelled it wrong. He started with “Marc, this is Pat Rusci from Legend.”

Of course, I asked him to spell his name and then asked him about Legend, first asking him if it was Legend Securities (from whom I have previously heard) or Legend Equities, the former subsidiary of Waddell & Reed. He said it was Legend Securities and that they were “very, very big.” Not just big, or very big, but very, very big. I asked him how big. He said it again. I asked, like Merrill Lynch big? No, he said, and I wouldn’t want to deal with those guys anyway.

So how big? Never got an answer. But he told me that their main office is on the entire 10th floor of a building on Wall Street. And that it was a whole 8,000 square feet. I was not suitably impressed. He told me they have brokers all across the country. They are neither on the 10th floor (maybe he’s never been there) nor do they have offices all across the country. According to their website, they have 8 offices in New York and New Jersey (plus the very, very, big main office) and one office each in Florida and Indiana. I think he overstated things a bit.

And that’s a shame. Because Praxedes Russi appears to be a fairly clean guy. His Brokercheck report only shows one old complaint from 1999. He does have some questionable firms in his background, but he spent 10 years at Park Avenue Securities, which is owned by Guardian Life Insurance. Even at Park Avenue, I wouldn’t do business with him, but he didn’t know who he was talking to and clearly hadn’t read my blog. Maybe he will now.

We parted ways and I don’t think he’ll be calling back. The source of these calls appears to be a list sold by Dun & Bradstreet. I hope the brokers who are using the list didn’t pay too much for my name.

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

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Welcome to the party, Ken Abbas (real name Kumail Abbas) from C.K. Cooper & Co., Inc.

Dear Ken Abbas – As promised, I am mentioning your name in my blog. Unlike you, I like to tell people the truth. You see, you told me that we spoke in October of last year. We never spoke and you know it. Of course, in October of last year, you were working for a different company.

I asked you if you had looked me up on the internet and you said you hadn’t. I looked you up on brokercheck.finra.org and found that you have worked for a variety of unknown and barely known brokerage firms. Prior to that, it seems the only qualification you had for being a broker was working at Enterprise Rent-a-car, Taco Bell and Target after graduating from high school in 2004. Yes, Ken (which is not your real name, that is Kumail), I checked you out. And I’m not sure I would want to rent a car or buy a Big Beef Burrito from you, let alone take a securities recommendation.

You see, dear readers, the cold callers have gotten my name. I don’t know how. But they call me and think that I’m an idiot. I always ask “Do I know you?” and they always tell me about some stock recommendation that they made to me in the past, which is a blatant lie. So, with a relationship based on a lie, why would I do business with them. I can only imagine what they do to older people who are easily confused and not armed with the same information as me, including a healthy dose of skepticism.

Please, cold callers, do your homework. Check me out and then think twice about calling me. Better yet, don’t call me at all.

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

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Further proof of the toothlessness of corporate billing policies.

We are continuing to analyze Wells Fargo’s counsel’s bills. Aside from identical billing entries for both identical or differing amounts, it seems that the firm may have figured out a way to recoup its investment, then waste it, on electronic discovery aids.

There are a number of paired entries where one legal assistant bills a .10 or .20 to tell another legal assistant to input documents into a Summation database. Summation, like the program our firm uses, Caselogistix, is a database that enables the law firm to categorize and search discovery documents, among other things. Then the second paralegal bills for importing the documents into the database and categorizing them.

The irony? I could see no laptop computer on the other side of the table. Summation has “briefcasing” abilities that allows the entire database, including the word index, to be saved on a laptop and used at trial. Caselogistix has the same functionality and I had my client’s entire database on my laptop. The other side, however, had a collection of banker’s boxes and no laptop in use that I could see. Whenever there was a document issue, I could see the senior associate leafing through the exhibit notebooks (one 4 incher and one 3 incher) trying to find a document to address the question. Again, no laptop.

Clients should not be paying for such inefficiency. I had Wells Fargo’s entire notebook in electronic form on my laptop. It was in a pdf file and I could word search it. I had better searching capabilities of Wells Fargo’s exhibit book than Wells Fargo did.

Wake up, corporate America. If you publish a billing policy, enforce it. I represent corporations with billing policies. I follow them. I have clients with e-billing and UTBMS codes. Most billing policies I’ve seen, other than one client that actually was part of FedEx, prohibit the routine use of overnight delivery services. But the fee affidavit I referred to was sent to me by email around 3:30 on Friday afternoon and then a hard copy was sent “Priority Overnight” for delivery Monday morning. I received it before 9:00 a.m. For what reason? Wells Fargo shouldn’t pay for this waste and neither should my client as the recipient of the fee application.

Dear reader (readers?), please instruct your staff about the judicious use of overnight delivery. If I am sent an email, what requirement is there to send a Priority Overnight FedEx, unless you have family members whose incomes depend on the success of FedEx?

I have represented very large corporations, and still do. But there are people within some corporations who seem to feel that a large law firm, with all of its inefficiencies, is the only way to get effective representation. Or the in-house decision-maker feels a large law firm provides “cover.” But when they do this, and pay the bills that contain obvious wastes of resources, how will a law firm ever become more efficient? Paying the bills of a firm that uses Summation in the office but not at trial, but instead sends a high-priced associate to manage the paper, rewards inefficiency. Most firms I represent will not allow two lawyers to attend a hearing without prior permission. Was there permission?

This was a $200,000 collection case. My firm has two lawyers and a paralegal. Wells Fargo is an enormous corporation. Did they think I was going to outgun them with my “vast” resources from the world HQ in Jupiter, FL? At one point they had five people working on this file. That’s two more people than I have in my firm. The staffing on this file was ridiculous as was the billing.

That’s the incredulous view of one lawyer from Jupiter, Florida. I’m Marc Dobin and I billed no one for this blog entry.

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Things I learned at an arbitration with Wells Fargo Advisors last week.

As you might know, I handle a lot of securities arbitrations. I usually end up learning a thing or two during the course of the arbitration. I thought I’d share some things with you.

1 – Wells Fargo Advisors does not have a policy stating that commissions generated by a client only belong to the “broker of record.” This may be the practice, but the branch manager testified that there is no such policy.

2 – Wells Fargo Advisors, as a matter of course, compounds interest monthly when it calculates the amount it is claiming on promissory notes. However, the promissory notes do not provide for monthly compounding of interest. When the witness was asked why the interest was compounded monthly, he essentially said “because that’s how we do it.” Wells Fargo withdrew its monthly compounding of interest calculation and was going to submit the simple interest calculation by affidavit. Haven’t seen the affidavit yet.

3 – Wells Fargo Advisors has a prepaid management fee agreement. A Wells Fargo witness claims that it is electronically attested to. No such agreement was produced.

4 – Wells Fargo Advisors’ practice of conducting most supervision through a central office, rather than at the branch level, has actually reduced the level of supervision, in my opinion as someone with over 25 years’ of experience in the securities business, not increased it. For example, a central supervision office employee has no “feel” for the office. That employee won’t recognize patterns or put a broker’s rep number to a name and then wonder why the broker is engaging in certain transactions. Instead, it appears that the branch manager pretty much waits for the central office to tell him/her what to do. In the meantime, there are certain things that the central office doesn’t look for and the branch manager can’t see. It’s a shame, too.

I used to describe being a branch manager as requiring as much art as science. Walking around the office, the branch manager can “feel” what’s going on. The manager can tell who is working and who isn’t. But if the manager is simply waiting for a computer to tell him or her what to look for, rather than being proactive, then it may be too late. And then to remove many of these tasks and assign them to some remote office to look at, well that’s just asking for a problem.

As an example, many years ago, probably close to 30, a regional administrative manager walked into a satellite office at 2:30 or so in the afternoon. The lobby was full of clients waiting to see one of the two brokers in the office. The office looked very busy. But the office had only entered 3 or 4 order tickets by 2:30. The regional admin thought it was odd and they decided to close the office and move the the brokers to the main office, under greater supervision. The brokers refused to relocate and resigned. After they left the firm, the wheels came off of the Ponzi scheme they were participating in. The regional admin was right. A computer could not detect what the regional admin understood. By the way, that regional admin is now a branch manager with Wells Fargo. And I hope his talents aren’t being wasted by relying only on computer printouts.

Today I enter my 21st year as a resident of the Sunshine State. When I left New York, branch managers managed. They reviewed. They gave sales advice. They mentored. Now they wait for HAL (that’s a Space Odyssey reference there) to tell them what to do. In my opinion, heavily relying on computers for branch office supervision (and I love computers for many things) is a mistake. Computers don’t feel. They don’t see. They don’t hear. But that’s what good managers do. Or at least they did until someone decided that computerized supervision was the next big thing.

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

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I am not immune to cold calls. Note to Joseph Gunnar, stop calling me.

I’ve been getting cold calls lately. I don’t know what list I got on, but they’re a pain in the neck. First of all, it’s never a large wirehouse broker who calls. It’s always some guy with a New York accent. I have nothing against New York. I went to school there. I worked there. Some of my oldest and dearest friends are in New York. But the accent is the first tip.

The second tip is the following statement “It’s been a while since we last talked…” Stop right there. We never talked. I am not a moron. I remember who I talk to. And I know I didn’t talk to some guy like you in any recent memory. Because you would have remembered better than I. I am not pleasant to these guys. They annoy me, these cold call cowboys.

Today, I received a call from Kevin at Joseph Gunnar. (I see they have a person named Joseph there. I wonder if they have anyone named Gunnar.)

He starts with how it’s been a while since we talked. I told him, we’ve never talked. He says “Sure we did, when you were with John Thomas.” Of course, I’ve never done business with John Thomas, which has recently been in the news. So I tell him that we don’t know each other and have never spoken.

Then I ask him my favorite question – “Do you know who I am?” So this nitwit says “Sure, you’re Marc Dobin.” I then ask him if he bothered to look me up on Google to see who I am. It’s not hard to find me. I tell him to bring me up on Google and I will be happy to explain to him how many regulations he violated just during the brief conversation we had. I told him, not so politely, not to call me again. I noticed on my phone records that they have called my office before and I don’t want them bothering me any more. I told him that I would sue his firm for continuing to call me after I tell him to stop.

It’s been a few hours, but I’ll bet they’ll call again.

I noticed from my phone logs that I am getting regular calls from John Carris Investments in New York. I wonder what they could want.

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

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Being a broker means that you can say “I am Sorry” – Dow Jones Video

I was quoted in a recent article on Dow Jones Wealth Adviser about whether or not a broker should apologize. My answer, just like one might expect from a lawyer, “It depends.”

If you’re sorry you’re late returning a call, say it. If you’re sorry the account statement has an incorrect address, say it.

On the other hand, if you’re sorry that your research department’s report was wrong, keep it to yourself. If you’re sorry that a recommendation you made declined in value, “sorry” is best left unsaid.

Here’s a video by the reporter (a short ad might run before the video):

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

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