1 – CNBC reported on 8/16/17 that while D.C. deregulates, the states are stepping in as Wall Street watchdogs. For example, the Massachusetts state securities regulator announced a recent investigation into how top U.S. brokerage firms handle customer buy and sell orders and whether customers are getting the best prices for their trades.
2 – On 8/17/17 Financial-planning.com had an article regarding FINRA hearings: a Who Decides Who’s an Expert? The author noted that FINRA hearing officers have broad discretion to accept or reject expert testimony. They get to decide whether an expert is qualified and they determine if the testimony is admissible. Some FINRA hearing officers rely on the Federal Rules of Evidence and relevant court cases interpreting those rules, but FINRA hearing officers are not required to follow those rules, and they have the ability to deem the testimony relevant and reliable at their discretion.
3 – Investmentnews.com reported on 8/14/17 that New York based Hallmark Investments was expelled and its CEO, Steven Dash, was also barred. It appears that this was in connection with an alleged scheme to sell stock shares to investors at fraudulently inflated prices. In settling the matter, neither Hallmark Investments, Dash, nor Stephen Zipkin (also of Hallmark Investments) admitted or denied the allegations, but rather consented to the entry if the Order as alleged by FINRA.
4 – On 8/14/17, Investmentnews.com reported that FSC Securities had agreed to pay $592,000 for failure to properly supervise leveraged Exchange Traded Fund (ETF) transactions. FSC Securities was alleged to have failed to reasonably supervise leveraged ETF transactions between 2009-2014. FSC Securities and other firms (including Morgan Stanley) have run into problems supervising transactions where ETF’s use of leverage to amplify returns of stock market indices are not designed for “buy and hold” investors. FSC Securities had general supervisory systems that were found to not be sufficiently tailored to address unique features and risks with these products.