Your clients will get the following letter when you change to a new firm:

Issues to consider when your broker changes firms
You’re receiving this notice because your broker has changed firms. If you’re thinking about whether to follow your broker or stay with your current firm, it’s a good idea to examine key issues that will help you make an informed decision. A good relationship with your broker is surely valuable to you, but it’s not the only factor in determining what’s in your best interest.
Before making a final decision, talk to your broker or someone at your current firm about the following questions, and make sure you’re comfortable with the answers.

Could financial incentives create a conflict of interest for your broker?
In general, you should discuss the reasons your broker decided to change firms. Some firms pay brokers financial incentives when they join, which could include bonuses based on customer assets the broker brings in, incentives for selling in-house products or a higher share of commissions. Similarly, some firms pay financial incentives to retain brokers or customers. While there’s nothing wrong with these incentives in either case, they can create a conflict of interest for the broker. Whether you stay or go, you should carefully consider whether your broker’s advice is aligned with your investment strategy and goals.

Can you transfer all your holdings to the new firm? What are the implications and costs if you can’t?
Some products, such as certain mutual funds and annuities, may not be transferable if that’s the case, you’ll face an additional decision if you follow your broker to the new firm: whether to liquidate the non-transferable holdings or keep just these holdings at your current firm. Either way, there couId be costs to you, such as fees or taxes if you liquidate,
or different service fees if you leave some assets at the current firm. Your broker should be able to explain the implications and costs of each scenario.

What costs will you pay, both in the short term and ongoing if you change firms? In addition to liquidation fees or taxes if you sell non-transferable assets, you may have to pay account termination or transfer fees if you close your current account , or account opening fees at the new firm.(Even if the new firm waives its fees as an incentive to transfer, that wouldn’t reduce any transfer or closure costs at your current firm.) Moving forward, the new firm may have a different pricing structure for maintaining your account or making transactions (such as fee-based instead of commissions ,or vice versa),which could increase or lower your account costs.Your broker should be able to explain the pricing structure of the new firm and how your ongoing costs would compare.

How do the products at the new firm compare with your current firm?
Of course, not all firms offer the same products. There may be some types of investments you’ve purchased in the past or are considering for the future that aren’t available at the new firm.
If that happens, you should feel comfortable with the products they offer as alternatives If you tend to keep a lot of cash in your account, ask what investment vehicles are available at the new firm for the cash sweep account and whether the interest rate would have an effect on your return.

What level of service will you have?
Whether you follow your broker to the new firm or choose another broker at your current firm, consider whether you’ll have access to the types of service, support and online resources that meet your needs.


A $150 million book of business Wells Fargo promised him never materialized — and then the wirehouse took him to arbitration…..

A wirehouse promises a veteran advisor a $150 million book of business and a $450,000-plus upfront bonus to come on over. The wirehouse resigns the FA’s job for him at his current firm, then e-mails his clients to tell them he’s leaving.

This strange and unusual real-life scenario begins to boarder on the bizarre when the book of business turns out to be only $10 million and five months after the advisor joins the firm, the wirehouse takes the vexed FA to arbitration by the Financial Industry Regulatory Authority (FINRA).

Read full article here.


Some sports fans laughed when controversial former NFL Terrell (T.O.) Owens recently said he was broke. But it turns out it wasn’t all his fault. reports that the Financial Industry Regulatory Authority has banned Jeffrey Rubin, Owens’ financial advisor, from working in the securities industry anymore.

Owens and at least 30 other NFL players invested in an “Alabama casino project that went bankrupt,” the news site reports. This dubious deal lost $40 million of the players’ money, and Owens sued Rubin earlier in the year. Michael Simon, T.O.’s attorney, said that Rubin failed to tell Owens that the electronic bingo machines that were to be used at the casino were illegal in the state. “It should have never been promoted to any NFL player or any investor,” he said. “It was illegal.”

FINRA said that one of the advisor’s clients lost $3 million on it, although the agency did not specifically say who had invested in it. But says that Jevon Kearse, the ex-Philadelphia Eagles player known as “The Freak,” also invested in the project.

“This case demonstrates how broker misconduct can target high-income, inexperienced, and vulnerable investors,” Brad Bennett, who serves as FINRA’s enforcement chief, said in a statement on the issue. “Jeffrey Rubin took advantage of professional athletes who placed their trust in him.”

The article says that Rubin has agreed to the securities ban, but has not admitted to the allegations.

Written by Lisa Swan


FINRA recently announced that it was backing off — for now — on its initiative to control U.S. registered investment advisors, reports. Richard Ketchum, the agency’s chairman said: “I’m not a big believer in beating a head against the wall,” and said that FINRA would “focus on things we can impact.”

This change in strategy was due to the U.S. Congress not planning on changing regulations regarding investment advisers. Right now, the Securities and Exchange Commission regulates the advisers, but because of budgetary constraints, they only get the chance to look at the advisers approximately once every 11 years.

However, FINRA did not permanently drop seeking the ability to take over reviewing registered investment advisers.  It called it a “critical investor protection,” but said that there was “clearly a lack of consensus about how best to address that problem.”

Congress has shown no interest in changing who reviews registered investment advisers. The agency said that “other issues are closer to the top of Congress’ agenda, so this one will likely not be resolved in the near term,” but it hoped that the legislative body would review the issue in the future.

Written by Lisa Swan


In an effort to help business victims of Hurricane Sandy, the Financial Industry Regulatory Authority altered some of their rules. reports that FINRA has relaxed some mandatory requirements for financial advisors.

The publication says that “rules were altered on Thursday regarding office relocations, deadlines for regulatory filings, such as U4 forms, deadlines for continuing education, and new member applications.” FINRA is also giving time extensions for those who were afflicted by the superstorm.

The agency said that it “recognizes that members need relief from many regulatory requirements as a result of the dislocation caused by Hurricane Sandy.”  In addition, it has encouraged financial advisors to let displaced advisors work with them temporarily. FINRA also said that financial firms should put a notice on their websites for customers to let them know who they should contact regarding their accounts.

FINRA itself faced issues due to Hurricane Sandy. It has been unable to access its New York office membership office. It advised new members to contact them regarding the status of their paperwork.

Written by Lisa Swan


That’s going to leave a mark. FINRA is raising its fees for membership, advertising, and corporate financing, reports. The reason? The regulatory authority needs more money to keep its monitoring technology and methodologies up to date. Those companies who are late on paying their dues will likely see the worst of the additional fees.

FINRA now charges “$125 for the first 10 minutes of video” advertising “or ten pages of material,” reports, the first increase in advertising rates since 2005. Membership fees are going up later on this month as well, with new member companies needing to pay between $7,500 to $55,000 just to apply. says that “applicants looking to clear or carry face an additional $5,000 fee.”

Other fees for current members will also increase, and in addition, FINRA will assess charges of $500 for incomplete applications, up from $300. FINRA’s CRD system, a web-based program, also has increasing fees, going up from $85 to $100 to sign up. There is also a $100 late charge for tardy disclosures in the system, increasing from $10 to $100.

Corporate financing fees are also rising, for the first time since 1970.  The filing fee is increasing from “0.01% to $0.015% of an accepted valuation of securities,” the publication says, with the maximum charge nearly tripling from $75,500 to $225,500.

A spokesman for FINRA said it has sent out alerts to its members regarding the new fees.

Written by Lisa Swan


The information revolution caused by the growth of the Internet also means that more records about financial advisors are publicly available than ever before. says that advisors need to get used to this “fishbowl effect.”

For example, the site BrightScope shows all sorts of data – both positive and negative – on financial advisors. Mike Alfred, the CEO of the company, tells that his company is simply making more available information that was already out there, such as assets under management, education, and even disciplinary information. But the publication says that Alfred’s company has “knocked the dust off advisor data and put it on display in a new way.”

BrightScope is just one of the companies putting such information out there on the Internet. Paladin Registry gets data from advisors themselves, AdviceIQ only will put up financial advisor information if they have had no records of disciplinary against them, and Advizent has data only accessible to its members. FINRA is also making its databases more user-friendly to the public, with a variety of ways to search on brokers.

Jack Waymire of Paladin tells that “higher quality advisors have nothing to hide, and lower level reps are uncomfortable with transparency.”  He notes that if advisors ”refuse to answer questions, we go back to the investor with an alert. And we say our experience is you may want to avoid this advisor in the future.”

What this all means is that financial advisors will need to be more transparent with their clients, due to all of these new information out there, because the industry is moving things in that direction, forcing financial advisors to reveal as much information as possible. The article also notes that “advisors are going to be visible whether they like it or not,” so that they should take steps “to make sure that the information being broadcast is accurate.”

Written by Lisa Swan


There are approximately 11%fewer broker-dealers now than there were in 2007, according to a new study. However, the pace of broker-dealers has been slowing since last near.  Investment News says that the Compliance Department, a consulting organization, discovered that 93 broker-dealers closed in the first quarter of 2012, while 137 did the year before.

In addition, there are more such businesses closing than opening their doors. In the first quarter of 2012, 44 broker-dealers opened their doors, which is fewer than the 57 who opened for business in 2011. And the Financial Industry Regulatory Authority (FINRA) there were 4,428 broker-dealers in existence as of March 2012, which is around 11% fewer than the 5,005 open in 2007.

David Alsup of the Compliance Department told Investment News that he didn’t “see an end to the steady downtick” of broker-dealers’ shutting their doors, “and I don’t see an uptick for a while. He indicated that the increasing regulation of such businesses was hurting the small broker-dealer. “You just can’t be a two-man shop and hire a $70,000-per-year compliance officer and stay in business,” he said.

On a more positive note, Alsup told Investment News that around 10 broker-dealers were shutting their doors each month, which is slightly smaller than the 12 a month closing a month in recent years. He said that was due to an increase in trading and the economy improving slightly.

Written by Lisa Swan


It looks like not everything is smooth sailing at Morgan Keegan these days, as the brokerage house becomes part of Raymond James. reports that despite the retention offers Raymond James has put on the table to keep Morgan Keegan’s financial advisors in the fold, seven advisors have left since December, according to FINRA records. That’s not all – Morgan Keegan lost around 190 advisors in the six months before, the publication notes, after Regions Financial Corp put the brokerage up for sale. All told, Morgan Keegan has lost 15% of their advisors since they first went up for sale. In some of the recent defections, the people leaving were already planning on going elsewhere before Raymond James agreed to buy the company. This includes folks like Terrence Puricelli, who moved on to Wells Fargo Advisors, and Charles Allain III, who departed for LPL Financial. Other advisors left in January, with one going to Wells Fargo, two going to JP Morgan Securities, one departing for Wunderlich Securities, and another moving on to Ameritas Investment Corp. Ron Edde, a senior executive recruiter for Armstrong Financial Group, claimed that those who left in January were what characterizes as “average or below-average producers.” He also said that the retention offers Raymond James put on the table would vest at the end of March, and were only for big producers. Edde also said that those financial advisors who brought in $200,000 or less did not have much of a future elsewhere. “A prostitute will have a better chance of getting a job at the Vatican,” Edde argued.

Written by Lisa Swan


UBS Securities is getting smacked down – again – for short sale shenanigans. reports that the Securities and Exchange Commission fined the company $12 million on this issue. This comes on the heels of an $8 million fine from the Financial Industry Regulatory Authority.

The complaints that the SEC and FINRA had about UBS involved the company’s short sales recordkeeping. reports that the SEC had issues with “inaccurate recordkeeping practices in providing and recording so-called ‘locates’ to customers seeking to execute short sales.” Now the problem, a reported violation of SEC Regulation SHO, reportedly has been fixed, according to

George Canellos, head of the SEC’s New York office, said that UBS “permitted its  employees to create records that do not accurately convey the basis upon which its employees granted locates.” And the SEC’s order against UBS said that “UBS’ practices obscured inquiry into whether UBS had a reasonable basis for granting locates, and created a risk of located being granted based on sources that could not be relied upon if shares were needed for settlement.” reports that “over the past two years FINRA has fined Deutsche Bank $575,000; Milwaukee-based Robert W. Baird & Co. $900,000 and Boston-based National Financial Services $350,000 for violations of Regulation SHO. None admitted any wrongdoing.” 

Written By Lisa Swan