Marwood Group Preferred Courses

The Foreign Corrupt Practices Act (FCPA) outlaws the bribery of foreign officials. Broker-dealers that do business in foreign markets must be aware of anti-bribery legislation that impacts them and have appropriate compliance policies and procedures in place. Failure to comply with the FCPA is also a violation of FINRA Rule 2010 which requires member firms to conduct themselves in accordance with just and equitable principles of trade. This module will describe different attempts to curtail bribery of officials and the civil and criminal penalties that have been imposed on violators.

The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Financial Crimes Enforcement Network (FinCEN), and the other financial regulators continue to make anti-money laundering (AML) compliance a top priority. One well-known brokerage firm recently paid more than $21 million in penalties to various regulators because its AML program failed to detect and report multiple red flags that indicated an illegal stock manipulation was in progress. To further signal the seriousness with which the regulators view AML compliance violations, the SEC has changed its “no-admit, no-deny” settlement practices to require admission of.

The Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), the Financial Crimes Enforcement Network (FinCEN), and the other financial regulators continue to make anti-money laundering (AML) compliance a top priority. In 2016, FINRA is again focusing on the use of delivery versus payment and receipt versus payment (DVP/RVP) accounts, in particular those of foreign financial institutions. These accounts might comprise a small part of the client relationship, but the requirements to monitor and detect suspicious activity, to know the customer, and occasionally to use enhanced due diligence, still apply.

FinCEN’s long-anticipated Customer Due Diligence (CDD) Rule became effective in 2018, and FINRA has announced that it will be examining its members to make sure they are complying with it. Brokerage firms are now required to obtain and verify the identities of the individuals who control their corporate customers. This course explains the CDD rule and what you need to do to make sure you are in compliance.

An overview of the investment advisory business that also explains how someone can become licensed as an Investment adviser representative (IAR).

Whether you work in a large office with many registered representatives or alone as an independent registered representative, branch examiners will be knocking on your door. Over the years, branch inspections have uncovered a wide variety of violations such as unregistered personnel selling securities, unsuitable recommendations, inappropriate switching of securities, unauthorized outside activities, insider trading, the sale of unregistered securities, and a host of other problems. We cover the red flags that will catch the attention of the examiners.

The state securities Administrators have examined broker-dealers every year. What are some of the common problems that the examiners found, and what should your firm do about them?

Historically, the regulators didn’t distinguish between institutional and retail investors in its communications rules. Recent rule changes loosen the regulatory requirements for institutional sales materials, placing more responsibility on the firms themselves for policing communications with their institutional investors.

Since the late 1990s, the U.S. securities industry has utilized the Order Audit Trail System (OATS) to simplify an order’s progression from its initial receipt to its eventual execution or cancellation, for tracking or auditing purposes. However, the SEC has released a plan to replace OATS by establishing a Consolidated Audit Trail (CAT), one of the world’s largest data repositories that will contain a complete record of all equities and options traded in the United States. This module will examine SEC Rule 613 and FINRA’s Rule 6800 Series which provide details of the provisions and terminology related to the CAT system.

FINRA will deal harshly with broker-dealers that fail to supervise the activities of their personnel. The penalties for this failure can be severe. In addition to fines, a supervisor may be suspended from working for a brokerage firm or from holding a supervisory position. This course covers recent actions taken by the regulator and the lessons that supervisors are expected to learn from them.

A comprehensive survey of the many rules and regulations that a registered representative must observe when communicating with retail clients. From road shows to newspaper ads, from prospectuses to e-mail, communications with the public must comply with industry rules.

Complexity and popularity make variable annuities an important issue on the regulatory agenda. Unfortunately, concerns about the way variable annuities are sold persist, as do customer complaints. As a result, FINRA Rule 2330 places new obligations and reinforces existing obligations on firms as well as their registered representatives and registered principals. You will need to know how the rule affects each group and what they will be required to do.

A study of the general investment features associated with common stocks, preferred stocks, rights and warrants, and sales practice considerations.

A study of the general investment features associated with common stocks, preferred stocks, rights and warrants, and sales practice considerations.

Investment adviser representatives must adhere to a fiduciary standard (i.e., to act solely in the best interests of their firms’ clients). Registered investment advisers are expected to adopt written policies and procedures that will detect, prevent, and correct violations of the securities laws. Advisory firms that are registered with the SEC are obligated to implement a code of ethics that articulates the ethical principles and conduct expected of IARs. Industry organizations require members to observe high standards. This module will address how all of these requirements come together to help IARs meet ethical challenges.

Ethics is a set of moral principles or values that guides behavior. Within a profession, ethics refers to the code of conduct that governs that group’s actions (i.e., how members interact with outsiders and with one another). Through multiple case studies and discussions, this module will examine industry practices, regulations, and standards to provide a starting point for determining the appropriate way to conduct business.

STC’s Ethical Decision Making for Commodities Professionals satisfies the NFA Rule 2.9 requirement for ethics training. Our module engages the learner as it walks them through a series of real-life ethical dilemmas faced by financials services professionals. Topics include: your firm’s ethical standards, NFA rules, dealing fairly with customers, insider trading, and fraud.

Through a series of discussions and case studies, this course presents examples of ethical dilemmas and how to avoid them. Topics include understanding your firm’s code-of-ethics, fair dealing, insider trading, churning, and fraud.

Registered representatives will, at times, encounter ethical dilemmas when dealing with clients. Acting ethically is not just a matter of adhering to FINRA rules, securities laws, and written supervisory procedures. They merely lay the foundation for ethical conduct. While we cover practices that must be avoided, by keeping the client’s best interests in mind, registered representatives are more likely to satisfy their ethical obligations.

The number of Americans who are 65 or older is expected to double by 2050. As people age, they may have difficulty understanding financial matters and making investment decisions. Sadly, seniors and younger adults with a mental or physical disabilities become vulnerable to financial abuse and exploitation. We cover the warning signs that suggest financial exploitation and discuss what to do if you suspect one of your clients may be a victim.

Supervisors should be on the lookout for suggestions of irregularities, what the Regulators call red flags. Many recent enforcement actions for failure to supervise have involved allegations that supervisors failed to detect or respond to irregularities. We cover potential red flags that you may encounter when performing your responsibilities as a supervisor - opening accounts, reviewing account activity, using exception reports, reviewing order tickets, validating client instructions as well as, letters of authorization and e-mail instructions, and keeping track of outside business activities. A red flag may turn out to be nothing, or it may indicate a serious problem, but it should never be ignored.

Although FINRA’s suitability rules mirrored the old NASD/NYSE rules, there have been significant changes. This module compares the new suitability rules with the old ones, detailing the differences and, most importantly, explaining what they mean. We also examine what firms must do to prepare for the new rules.

When performing trade surveillance in the fixed income markets, many of rules set by the Financial Industry Regulatory Authority (FINRA) that apply in the equity markets also apply in the bond markets. In addition, there is set of rules that apply to transactions in municipal bonds, as promulgated by the Municipal Securities Rulemaking Board (MSRB), many of which are similar to FINRA’s rules.

Prohibited activities that trade surveillance professionals in the bond market seek to identify include: unfair prices, quotes and trades that are not bona fide, trades that violate best execution standards, excessive markups, markdowns and commissions, price collusion, trading ahead of customer’s orders, front running, insider trading, wash trades, parking violations, unusual trade corrections, and any activities designed to manipulate the price of a bond.

The regulators are continually scrutinizing gift-giving and entertainment practices related to brokerage business. Firms and representatives should be wary about throwing a lavish party for counterparts at another firm or providing tickets to a sporting event. These seemingly innocuous actions may result in regulatory problems for representatives and their firms.

The regulators have long been concerned about the growth of hedge funds, particularly among retail investors and pension funds. Today, there are an estimated 10,000 hedge funds worldwide managing more than two trillion dollars in assets. Suitability and sales practices are key issues for registered representatives who sell these products.

Trading has gone from seconds to microseconds, putting technological innovation and speed ahead of regulation. Algorithms and high-speed trading systems can invite abuse. Armed with advanced surveillance systems, such as MIDAS and CAT, which can record events to the microsecond, the SEC and SROs are better equipped to stop abuses such as pinging, spoofing, quote stuffing, and layering. Some high-frequency trading (HFT) firms are required to join FINRA and their associated personnel are required to pass the Series 57 Examination. While regulations must maintain fair and equitable practices, they must also provide the opportunity for profit.

The Red Flag Rules and the proposed SEC amendment to Regulation S-P are designed to protect clients of firms that gather and use consumer information to develop identity theft prevention programs. The foundation of the program is risk assessment-identifying the red flags relevant to a firm and then developing a strategy that responds to them once suspicious activity is detected. Do the Red Flag Rules apply to broker-dealer firms?

A simple definition of insider trading that’s often used is, "the buying or selling of securities based on material, non-public information." However, the reality of insider trading goes beyond this simple definition and often evolves into much more complex situations. This module will examine the steps that regulators take to detect and punish any person who trades on inside information, the obstacles that are in place to prevent insider trading, and how registered representatives can avoid, identify, preempt, and deal with potential insider trading situations.

An in-depth discussion about how suspicious trading is investigated, the steps taken to prevent abuses, and how the rules are enforced.

A thorough analysis of sales and trading rules as they apply to fixed income transactions for institutional customers. Topics include: insider trading, information barriers, and suitability issues for institutional clients.

A thorough analysis is provided of sales and trading rules as they apply to equity transactions for institutional customers. Topics include proprietary trading, insider trading, information barriers, and suitability issues for institutional investors.

A fiduciary is someone who acts on behalf of another and must always put the other person’s interests first—ahead of his or her own. Currently, IARs have a higher fiduciary duty to their customers than other financial professionals. This course discusses these responsibilities and how to keep conflicts of interest at bay.

Is it suitable for a registered representative to recommend that distributions from a 401(k) or other employer-sponsored plan be rolled over into an IRA? The answer is maybe. In one year, approximately 95% of the money invested in traditional IRAs came from rollovers, principally from employer-sponsored retirement plans. We discuss possible alternatives such as leaving the money in an existing 401(k), rolling the money into a new employer’s plan, or cashing out.

Leveraged exchange-traded funds are the latest innovation among ETFs. Conventional ETFs are designed to mirror the movements of an index on a one-to-one basis. A leveraged ETF amplifies these movements by 2 or 3 times. An inverse leveraged ETF does the same thing, only in reverse. FINRA is concerned that many investors may not appreciate the unique characteristics of these products, which are only suitable for sophisticated investors who intend to hold them for a day or less. Mortgage-Backed Securities and CMOs. A thorough review of the mortgage-backed securities marketplace. Emphasis is placed on mortgage-backed securities and collateralized mortgage obligations, including risk factors, suitability issues, and sales practices.

FINRA announced that it would begin issuing firms a surveillance report card to assess the effectiveness of their software systems in capturing and preventing market manipulation. The focus of the first report card was to detect layering and spoofing. The regulator uses its market surveillance programs to determine whether these techniques are at play within a firm’s business—taking place entirely throughout the firm’s transaction systems, or one part of the firm. FINRA also focuses on how firms use information taken from the report cards to improve operations and compliance.

FINRA requires that the prices at which firms sell securities to the public be fair and reasonable. In order to guide its members in calculating fair prices, FINRA requires that they follow the 5% Markup Policy, a rough guideline, not a strict rule. We discuss the factors that firms must take into account when determining an appropriate markup, markdown, or commission and examine interpretations of FINRA rules to clarify how markups on debt securities should be calculated.

The SEC’s Office of Compliance Inspection and Examinations has issued a Risk Alert to advise broker-dealers about the potential risks associated with these account types when the firm provides the master/sub-account holders with direct market access. We discuss the risk that unscrupulous clients may manipulate this account structure to engage in illegal activities such as money laundering, insider trading, market manipulation, account intrusion, breaches in information security, acting as an unregistered broker-dealer, and using excessive leverage.

The MSRB has enacted new rules, and existing ones have gone through extensive revisions to enhance market surveillance, provide investor protection, and ensure that municipal securities issuers receive adequate disclosure from their underwriters. The MSRB has also reviewed its policies and made changes regarding the retention of books and records, periodic examinations of its members, and rules for brokers’ brokers and municipal securities professionals. The new provisions strive to achieve fair principles of trade across the municipal securities markets.

Sales charges and 12b-1 fees can have a significant impact on an investor’s return. Registered representatives need to understand how sales charges work, the different ways that clients may qualify for discounts, and which share classes are most suitable for different investors. Since FINRA is concerned that some clients are not receiving the breakpoints and fee waivers to which they are entitled, it will focus on these issues as it examines its members.

FINRA has announced that it will be monitoring the way these products are sold. Although non-traded REITs, direct participation programs, and business development companies may be a way for some investors to diversify their portfolios and earn greater returns, they also come with disadvantages such as a lack of liquidity, high fees, and valuation issues. FINRA recently amended its rules to address the way shares of these programs are estimated on customer’s account statements. We describe the suitability, communication, and supervisory issues associated with these programs as well as the impact of these rules.

Online distribution platforms allow small businesses and start-ups to raise capital in a relatively new way, which is commonly referred to as crowdfunding. These distribution platforms make it much easier for small issuers to raise capital from a wide audience of potential investors. Some issuers will conduct public offerings, while others will raise capital through private placements. This module will examine Regulation Crowdfunding as well as the exemptions that are available for different issuers.

Harassment prevention training is now mandatory for employers in some states. In fact, even companies that are not located in these states are well advised to provide this type of training to their employees. Using realistic examples and scenarios that are tailored to the financial industry, this program will help a person to identify sexual harassment in the workplace, prevent it, and take appropriate action if it occurs.

Due to the significant time and costs involved in conducting a public offering, many small issues of securities are conducted as private placements, often by using one of the exemptions (safe harbors) that are contained in SEC Regulation D. This module will cover the Rule 506(b) and 506(c) exemptions of Regulation D, the SEC’s revised definition of accredited investors, and FINRA’s rules regarding communication with the public.

FINRA issued Regulatory Notice 10-22 to remind broker-dealers of their obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings made under Regulation D. Practicing due diligence is the first step a firm must take in offering unregistered securities. Determining suitability is the next step when marketing them to clients. FINRA offers suggestions on how to accomplish this.

Today, there’s a significant amount of confidential, non-public customer information in the public domain and, as more information is being collected, it means more information to protect. Congress and the SEC have passed laws to ensure this protection. FINRA has received an increasing number of reports of customer accounts being compromised and reminds its members of their obligation to prevent customer information from being misused.

Papers, papers, everywhere, but are they the right ones? It feels as though we are drowning in paper, especially when working in the highly regulated financial services industry, which requires considerable recordkeeping. Technology has helped reduce the load, but it has also created its own problems. What records are broker-dealers and their employees required to keep, for how long, and in what format? We pay special attention to completing order tickets and collecting customer account information—two responsibilities that registered representatives perform every day.

The SEC’s Regulation Best Interest (Reg BI) creates a new higher standard that broker-dealers and their registered representatives must follow when recommending securities or investment strategies to retail customers. Any products or strategies that these firms or individuals recommend to retail customers must be in the best interest of the investors (not just suitable). This module will examine the different aspects of Reg BI, the new Customer Relationship Summary (Form CRS), as well as new interpretations under the Investment Advisers Act of 1940 regarding financial advice and retail clients.

The SEC has regulated short sales since the late 1930s and the rules had not changed until recently. Technology revolutionized the securities industry and regulators were forced to reevaluate long-standing regulations—particularly naked short selling. Regulation SHO is the SEC’s ongoing response to short sale abuses in the markets.

The SEC’s Office of Compliance Inspection and Examinations has issued a Risk Alert to advise broker-dealers about the potential risks associated with these account types when the firm provides the master/sub-account holders with direct market access. We discuss the risk that unscrupulous clients may manipulate this account structure to engage in illegal activities such as money laundering, insider trading, market manipulation, account intrusion, breaches in information security, acting as an unregistered broker-dealer, and using excessive leverage.

Most Americans are woefully underprepared for retirement. This course covers the many aspects of retirement planning—how to determine the savings needed, the common types of retirement vehicles, such as IRAs, and 401(k) available to investors, and how to invest retirement assets.

The day that your clients have long anticipated has arrived. They are retiring! But there is still work to be done helping them manage their retirement assets. This course explores common decisions new retirees must make as well as how to allocate and withdraw funds in retirement.

A discussion of the new rules and registration requirements for research analysts and their supervisors

This SEC rule permits non-U.S. (foreign) broker-dealers to conduct certain activities with U.S. investors without being required with the SEC as broker-dealers. Rule 15a-6 is considered a great success in enabling foreign BDs, particularly those with chaperoning arrangements, to access U.S. investors. This module will examine chaperoning arrangements and also the four specific requirements that must be met to avoid registration.

There has been a significant increase recently in the number of regulatory actions involving selling away and outside business practices. Ignoring the FINRA rules regarding selling away and outside business activities can cost you your career.

An overview of the regulations governing the sale of securities in a bank under the Gramm-Leach-Bliley Act. Discussions include the impact of GLB, privacy rules, suitability issues, and communications with the public.

Trillions of dollars have accumulated in the retirement accounts of baby-boomers who will soon be making the transition from gathering assets to preserving them. The question is, should variable annuities be part of end-of-life planning for seniors?

Social media is the new frontier for many investment advisers. This innovative technology is filled with possibilities for attracting new clients, but is also presents potential regulatory pitfalls involving record retention, suitability, and advertising. Although the regulators are still trying to determine the best way to protect investors without unduly restricting legitimate business activity, firms are still required to incorporate social media in their compliance programs and to regularly evaluate their policies and procedures for effectiveness.

FINRA defines structured products as securities which are derived from or based on a single security, a basket of securities, an index, a commodity, a debt issuance and/or a foreign currency. Structured products are typically issued by investment banks and are characterized by the significant variety in their construction, wrapping, and returns. This module will focus on the different types of structured products and the importance of determining the suitability of any structured products recommendations made to customers.

Determining suitability is a complicated process that is rarely black and white. Many customer complaints include allegations of unsuitable investments. Using concrete examples, we walk you through the process of building customer profiles and selecting suitable investments.

Suitability has two aspects—a registered representative must both “know the customer” and “know the product” that he or she is selling. One of the key elements in understanding investment products is understanding the types of risk they might entail. This course will review the most common types of investment risk and the products with which they are associated.

Since its introduction, the Section 529 college savings plan has become an effective way to fund college education. With so many plans to keep track of, broker-dealers have had trouble creating supervisory procedures and suitability standards. Some have considered curtailing or discontinuing selling them. A better solution is to accept the regulatory climate and pay more attention to individual investor’s needs. We show you how.

Ensuring that investors are not overcharged for mutual funds has long been a major regulatory concern. The SEC is also investigating the way investment advisers select share classes of mutual funds and Section 529 college savings plans for their clients. This module will identify the different types of share classes, breakpoints, waivers, sales charges, and 12b-1 fees that are associated with them. Investment advisers have an obligation to recommend the share class that represents the best option for their clients.

Wave Theory changed Wall Street forever. We take a brief look at the beginnings of technical analysis and the importance that it places on understanding the current trend of the market and on forecasting stock prices.

Traditional economic theory assumes that investors always make rational decisions to maximize their wealth, but it this really the case. How do investors actually behave? Behavioral finance may provide some answers.

An extensive analysis covering the characteristics of variable annuities and variable life insurance products.

An examination of variable annuities, their attributes, structuring alternatives, and the due diligence required for making suitable product recommendations. The courses also addresses annuity exchanges as well as highlights recent cases regarding sales practices.

This module offers an in-depth discussion on money-laundering, including recognizing money laundering activities, reporting requirements, and the ways to prevent it. Case studies offer examples on how to apply this knowledge.

This module offers an in-depth discussion on money-laundering, including recognizing money laundering activities, reporting requirements, and the ways to prevent it. Case studies offer examples on how to apply this knowledge.

When is business entertainment excessive? Should specific dollar limits be imposed by the regulators as has been done with the gift-giving rule? Although FINRA has not imposed dollar limits, most member firms have established their own. Each member must have specific written policies in place that are tailored to its particular type of business and location to prevent entertainment that causes a conflict of interest between the member firm and its customers’ best interests.

There are a significant number of rules and regulations that a registered representative must observe when communicating with institutional clients. From road shows to newspaper ads, from prospectus to e-mail, communications with the public must comply with industry rules. Included are discussions on collateralized mortgage obligations (CMOs) and security futures that are not in the Customer Communications for the Retail Professional module.

The SEC issued a Risk Alert to remind broker-dealers of their obligation to monitor their clients’ transactions in unregistered securities—particularly micro-cap securities—to be reasonably certain that these unregistered securities are eligible for resale to the public. Monitoring includes carrying out a heightened investigation before executing a transaction when a suspicious activity (red flag) is observed surrounding the transaction. The unfortunate alternative could be enforcement action that’s taken against the broker-dealer by the regulators.

The FINRA Report on Cybersecurity Practices concluded that broker-dealers face a variety of rapidly evolving threats and need a well-designed and adaptable program to address these threats. FINRA views this problem as high-priority and will be looking for evidence that a firm is making a good-faith effort to identify risks and taking steps to guard against their occurrence. Even if no customer is harmed, regulators may still bring an enforcement action if non-public information has been exposed to unauthorized persons. Training personnel on how to recognize and respond to threats reduces the likelihood that a cyberattack will be successful.

The broad array of formats for digital communications, as well as devices that use those formats, have created multiple challenges for regulators and firms. What are the current rules for digital communications? What steps are firms required to take to filter and retain this wave of information?

Since e-mail has become second nature to us, we may forget that it’s regulated in the same manner as the more traditional methods of paper and phones. The proliferation of electronic gadgets means that you can access your email from almost anywhere. For this reason, your firm may require you to rout your business-related email through its computer network or use a company-issued device. We review what you need to remember when using email, such as which communications need approval by a supervisor, suitability considerations, firm policies for detecting customer complaints, and verifying that instructions to transmit funds are legitimate.

Although regulators typically focus their attention on employees who interact directly with the public, operations personnel also face regulatory scrutiny and are subject to strict legal and ethical obligations. The operations area, which has responsibility for trade confirmation, transaction settlement, custody, account transfer and maintenance, and securities lending, is also responsible for creating many of the records that a firm is required to maintain. By fulfilling their ethical obligations, operations personnel keep everyone out of trouble.

FINRA has consolidated the former NASD and NYSE research analyst rules, keeping most of the substantive provisions of the old ones, but including some changes. Requirements include members having written policies and procedures in place for controlling conflicts of interest and including information barriers to keep analysts from being overly influenced by investment banking as well as sales and trading. A new rule has been added that covers debt securities for the first time, making compliance more complicated for firms that publish debt research.

FINRA Rule 5270 expands the ban against front-running when personnel know that a block transaction is about to occur. Using concrete examples based on regulatory actions, we explain what front-running is and the implications of the rule. We also discuss when a trader with information about an imminent block transaction may resume trading and what exceptions exist that allow broker-dealers to continue to trade when the trading desk has knowledge that a block transaction is imminent.

A brokerage firm face severe penalties when an employee is convicted of insider trading and the firm is held responsible for the failure to supervise. Negligence is easier to prove when firms don’t implement written policies and information barriers. We discuss the different ways of blocking information, the methods of preventing trading issues at the registered representative level, identifying potential insider trading, and the appropriate steps to take when insider trading is suspected.

How do securities analysts evaluate companies? How do they determine an issuers EPS or P/E ratio? This material will help registered representatives understand how securities analysis works and how analysts arrive at their opinions about stocks.

FINRA has urged firms “to be proactive in helping to educate customers about how to avoid being victims of financial fraud registered representatives are often in a unique position to help customers learn about how to avoid fraudulent solicitations.” This article addresses cold-calling abuses, spreading false and misleading rumors, penny stock and pump-and-dump schemes, Ponzi schemes, Internet investment fraud, and corporate fraud.

Red flags—situations that may indicate that a violation has taken place—can appear in a variety of operational areas, including new accounts, account maintenance, trade and settlement, clearing, and cashiering. This module specifically focuses on the red flags related to low-priced securities (penny stock). These red flags may be indicative of criminal activity and could result in a firm being exposed to a high level of regulatory risk.

This module describes the new rules and registration requirements for research analysts and their supervisors

Based on the concern that violations of trading rules may do harm to fair and orderly markets, regulators are strengthening their surveillance systems and scrutinizing the trading activities of institutional traders. With surveillance becoming easier as a result of electronic trading and sophisticated systems, orders can be tracked from inception to execution. We discuss the SEC and FINRA rules governing orderly execution and reporting that institutional traders must know.

Because people are living longer today, the senior population is growing faster than ever before. However, financial abuse is growing in proportion to our aging population. As a result, FINRA has proposed two rule changes— 1) to allow the placement of a temporary hold on a disbursement of funds or securities from a customer’s account and 2) to stress the importance of obtaining the name of a trusted contact person with whom to get in touch to discuss suspected exploitation. We discuss the proposed rule changes, cover red flags of diminished capacity and elder abuse, and compare FINRA’s proposed rules to NASAA’s Model Rule on the same subject.

SEC administrative proceedings, used to resolve allegations of wrongdoing within the securities industry, have come under fire with challenges to the process being aired in federal courts and media publications. The disproportionate rate in decisions rendered against respondents in administrative proceedings, as compared to actions heard in federal courts, has led some to question the impartiality of the SEC proceedings.

The SEC issued a Risk Alert reminding broker-dealers of their obligation to monitor their clients’ transactions in unregistered securities, particularly microcap securities, to be reasonably sure that these unregistered securities are eligible for resale to the public. Monitoring includes carrying out a heightened investigation before executing a transaction when a suspicious activity (red flag) is observed surrounding the transaction. The alternative is enforcement action taken against the broker-dealer by the regulators.

This module provides an overview of the supervisory issues that institutional managers face along with the tools that they have at their disposal to deal with them. Discussions include potential red-flag case studies to illustrate real and potential problems that are likely to arise and how a manager might resolve them