Month: February 2010

FINRA proposes to allow non-party witnesses to bring their lawyers.

It has happened to me many times. A client calls me to advise that they have been ordered to appear as a witness in an arbitration proceeding. It is not their fight, or at least they are not named. Inevitably they ask “Can you come with me?”

In the past, the answer was “I can go, but the arbitrators may not even allow me in the room.” Some arbitrators would allow an attorney to be present, but he or she would not be allowed to say anything other than his or her name “for the record.” Other times, an attorney would be allowed to intervene when it appeared that the testimony was being used for other than the stated purpose.

FINRA now seeks to formalize attorney representation of non-parties as witnesses. FINRA has proposed a rule that would permit attorneys to be in the room. Their ability to participate would still be determined by the panel, but at least the attorney would be in the room. That would give some comfort to the witness.

Where this will be meaningful is when a lawyer is using the testimony of the non-party witness to obtain information for other purposes or other cases. The attorney would be able to intervene and advise the panel of the objection to the use of the arbitration forum as a substitute for a deposition. The attorney, rather than the witness, could defend the witness’ objection to a line of questioning.

The proposed rule change refers to keeping “due process” in mind. Sometimes that concept seems to be missing from arbitration. In this situation, it appears that FINRA has it right.

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

FINRA to propose Brokercheck expansion.

FINRA, the securities industry watchdog, has had a public disclosure program for nearly 20 years. It might actually be 20 years, but my memory is starting to get fuzzy. FINRA’s memory, however, is not.

FINRA wants to expand the level of disclosure on the Brokercheck website to include certain disclosure items as far back as 1999 and other matters for 10 years back. The FINRA press release describes this in better detail.

The upshot is this — once again accurate U-4 and U-5 reporting will be put on the front burner. Once again, brokers will be hounded by items from their past, but this time the past will be a longer period of time. So, if you are a registered representative, be careful about what is disclosed about you. You could be living with it for a very long time.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. My name is Marc Dobin.

Investment News confirms my suspicions about CFP Board and others.

I’m not a big fan of the CFP Board. I don’t think it’s that hard to get the CFP mark. And their “disciplinary” procedures really strike me as a kangaroo court.

Now Investment News has uncovered the CFP Board’s little secret, along with the secrets of other grantors of marks. The article points out that these grantors (they are NOT regulators) do not pay much attention to the people to whom they’ve granted the license to use the marks.

The common theme in the article seemed to be that these grantors use the Internet and rely on complaints to determine if they should take action against a licensee. My experience is that the grantor waits until after the real regulator has done its job (usually FINRA) and then swoops in to pick over the bones.

My experience with the CFP Board is that the so-called disciplinary rules are draconian and are slanted in favor of the Board. The timelines are short, the hearings are held in inconvenient locales and the licensee has to pay a fee just to be heard. And people complain about the lack of due process in arbitration! My advice to CFP licensees when the CFP Board comes knocking, why bother? Do people really pay attention to the mark? Or do they care that you, the financial professional, do a good job?

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

Here’s a brilliant idea – a power outlet with USB Power.

I am so jealous that I didn’t think of this. A friend of mine sent me this link.

Outlet with USB Power

I can’t believe I didn’t think of this. My wife thought I was an idiot when I came up with the idea of a remote control thermostat. Look who’s the idiot now!
This will be a great item. I wish them much success and I will be buying a bunch.
To all my friends “up north” – stay warm. You could use this to power your USB-powered coffee mug warmer.

FINRA announces social media webinar.

The Financial Industry Regulatory Authority, as the securities industry’s regulator, is on the lookout for new and creative ways for brokers to get themselves and their firms in trouble. First it was email. And lawyers had a field day with whether or not email constituted correspondence or simply a “communication”. Systems were developed, along with rules, to supervise email.

The World Wide Web came along with email. Obviously this was a form of advertising, but how was it going to be regulated by FINRA and supervised by the firms?

The next hole in the dike was Instant Messaging. How could a firm supervise that? Thanks to “open architecture”, certain IM systems could be used and supervised.

Now we have social media such as Facebook, LinkedIn and, to a lesser extent, MySpace. This is, by no means, a complete list. And it does not address the foreign sites. What’s a firm to do?

One alternative is to ban the use of social media altogether. That would be a nice try, but I doubt it would be effective. Another is to regulate it and supervise it. this is the route that they will need to follow. FINRA is offering a webinar (how fitting) on social media.

There are some interesting questions here. If a broker is friendly with a client before the client relationship existed, what communications need to be supervised? How about if the client and broker become friends after the relationship is formed? I know that, in my representation of brokers, they frequently develop client relationships with people they like. This is what we called a “slippery slope” in law school. In other words, where does the line get drawn? We’ll see.

That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. My name is Marc Dobin.

Marc S. Dobin quoted in Compliance Watch Blog for Dow Jones.

I was quoted on the Compliance Watch blog by Suzanne Barlyn. Suzanne is a well-respected reporter on the financial scene. She knows who to talk to and asks the right questions.

This article was written about former Lehman Brothers brokers who are left defending claims regarding products sold while they were employed at Lehman. With the bankruptcy of Lehman, there is no traditional “deep pocket” so investors are looking to their broker for restitution. This is generally not an effective strategy as most brokers do not have the kind of money the client is looking for.

The larger firms generally do not have insurance against these claims. So the brokers are unprotected as well.

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

Look, Mom, I’m on television

A client sent me this link to a YouTube video. It appears that one of the hard-working traders in the background was using his expensive equipment for something other than trading. His employer was not amused.

That’s the bemused view of one lawyer from Jupiter, Palm Beach County, Florida. My name is Marc Dobin.

Marc S. Dobin, Securities Lawyer, Featured on Lawyersandsettlements.com

I was featured in an online article for the website “Lawyers and Settlements.”

Securities Fraud – Securities Fraud Lawsuits |LawyersandSettlements.com

The “read your statements” comment was drawn from an article I read in Investment News. Too scared to open statements, couple loses in arbitration – Investment News
More than 20 years ago, I represented Prudential-Bache Securities in an arbitration where the client’s lawyer thought a good defense was to demonstrate that the client did not read his statements. I could not comprehend that strategy. Neither could the arbitrators.
The statements are sent to customers for a reason. In many cases, a brokerage account is worth the same as, if not more than, an investor’s house. Why wouldn’t you want to know what is going on?
That’s the view of one lawyer from Jupiter, Palm Beach County, Florida. My name is Marc Dobin.