Beware of Auction Rate Securities Settlement "Phishing" Scam

FINRA has issued an Investor Alert to warn the public about a recent auction rate securities (ARS) “phishing” scam that promises compensation from ARS settlements in exchange for personal information. Follow the link to the FINRA web site. The email looks like it originated from FINRA—although it did not. It purports to inform the recipient of regulatory actions, including fines imposed by FINRA related to ARS, and states that the recipient is due $1.5 million regardless of the amount of their ARS investment or loss. The email then “phishes” for personal information including occupation, address and phone number. More>>>

No More 50% Pay Cuts?

Sallie Krawcheck, Bank of America Corp.’s head of wealth management, said she won’t do “stupid things” to pay policies that might spur financial advisers to leave the bank. I guess we don't be seening any more 50% pay cuts or insulting retention bonuses from BofA/Merrill that caused so many brokers so much harm.  More>>>

No More 50% Pay Cuts?

Sallie Krawcheck, Bank of America Corp.’s head of wealth management, said she won’t do “stupid things” to pay policies that might spur financial advisers to leave the bank. I guess we don't be seening any more 50% pay cuts or insulting retention bonuses from BofA/Merrill that caused so many brokers so much harm.  More>>>

Report Cites Finra Lapses in Fraud Probes

FINRAhas repeatedly denied that it had any responsibility for the Madoff Mess, claiming earlier this year that  "[n]one of the fraudulent activities that have been alleged deal with the activities of the broker-dealer or come under the jurisdiction of FINRA" according to Reuters. But today a special FINRA committee has release a report that addresses teh failure of FINRA to uncover the Stanford CD program issues, and yes, the Madoff Mess. The report states "FINRA examiners did come across several facts worthy of inquiry with the Madoff scheme that, with the benefit of hindsight, should have been pursued."
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RIA Assets Fall But Their Numbers Grow

A recent report has confirmed what we suspected - brokers and groups of brokers are moving to the investment advisory side of the business, leaving FINRA and its regulatory nightmare behind them. FA Magazine is reporting that while total assets under management for advisers declined by more than 20%, which is no surprise, the total number of advisers has increased. More>>>

The IAA Favors Banning Mandatory Arbitration

I am constantly amazed at the positions people take on issues when they haven't thought the entire issue through. The Investment Adviser Association, a trade association of investment advisers,  supports the Obama's administration's efforts to ban mandatory arbitration clauses in securities contracts.

That is an easy position to take when it doesn't affect you, and when it damages your competitors. Arbitration clauses are so widespread in customer agreements because the government forces broker-dealers and individual brokers to arbitrate their disputes with customers. In order to level the playing field, firms started including arbitration agreements in their customer agreements, so that they had the ability to force a customer to arbitration.

Of course, the government does not force investment advisers to arbitrate their disputes with their customers; yet.

If pre-dispute arbitration clauses are banned, there will be no impact on the members of the IAA - no one will be able to force them to arbitrate a claim, since there is no rule that requires them to do so; yet. However, banning pre-dispute arbitration clauses, without addressing the government-forced arbitration clause for brokers, creates a one way street - customers can force brokers to arbitrate, but brokers cannot force customers to arbitrate.

How is that fair, just, or equitable? Clearly it is not.

The IAA thinks it is a good idea to ban such agreements and to create a one way arbitration agreement for their competitors? I'll be here to remind them of this position when the government combines the regulations for advisers and brokers, and forces investment advisers to arbitrate their disputes, as they currently force brokers and broker-dealers to arbitrate.

If arbitration is unfair, then let's ban it. It if is unfair  then the rule should be that no one can be forced to arbitrate a dispute before it arises. Ban pre-dispute arbitration agreements, and ban agency rules which force over 650,000 employees to arbitrate their disputes with their employers and their customers.
 
The Investment News article on the IAA position is here.

Advisors’ Job Attitude, Outlook Improves

A new survey reveals that independent RIAs have seen their level of job satisfaction rise 10% and the number with an optimistic outlook for the U.S. economy has climbed by 25% over the past three months, according to a survey released by TD Ameritrade Institutional. Half of the 500 RIAs surveyed gave a top rating (9 or 10) to their satisfaction with their job, up from about 40% three months ago. More>>>