Category Archives: Enforcement

Senior Investors Focus of New “Principal Consideration” in FINRA Sanctions

Last month, FINRA’s National Adjudicatory Council (NAC) introduced new Sanction Guidelines which allow the NAC and FINRA staff to take into consideration the “undue influence” of registered individuals over vulnerable customers in determining appropriate sanction levels. The last update to the Guidelines occurred approximately two years ago, and included changes related to unsuitable recommendations and misrepresentations. Last month’s changes to the Guidelines provide for the first time a “principal consideration that analyzes whether a respondent has exercised undue influence over a customer.” Now listed as a specific factor for adjudicators and FINRA staff to consider in determining appropriate sanctions is  “[w]hether the respondent exercised undue influence over the customer.”

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Additional contributors to this post:

Bruce M. Bettigole, brucebettigole@eversheds-sutherland.com

Sarah Razaq Sallis, sarahsallis@eversheds-sutherland.com

Caveat Compliance: Can Firms Rely on Advice Received from Compliance Consultants?

Broker-dealers (BDs) and investment advisers (IAs) regularly hire compliance consultants to obtain advice about regulatory requirements. A recent Securities and Exchange Commission (SEC or Commission) enforcement proceeding against an investment adviser (IA) calls into question whether firms may rely on compliance consultants as a defense to violating the law.  However, if firms take proper steps, BDs and IAs may still be able to retain consultants and defend themselves based on the advice they receive. Otherwise, “caveat emptor” (as the saying goes) or “caveat compliance” (as the SEC seems to be saying).

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Additional contributors to this post:

Brian L. Rubinbrianrubin@eversheds-sutherland.com

Rebekah R. Runyonrebekahrunyon@eversheds-sutherland.com

DOL Provides Temporary Enforcement Relief on Fiduciary Rule


The DOL issued a Field Assistance Bulletin (FAB 2017-01) on Friday, March 10, 2017 to address near-term compliance concerns relating to a proposed 60-day delay of the Fiduciary Rule. As previously reported, the DOL issued a proposal on March 2, 2017 to delay the April 10, 2017 implementation date of the Fiduciary Rule by 60 days. This 60-day delay is not yet final, however, and there has been confusion over what will happen if a decision on the delay is not made until after April 10 or if a decision is made too close to the implementation date to allow time for compliance. Although the DOL has stated that it intends to issue its decision before April 10, it issued the Bulletin to announce a temporary enforcement policy which provides certain limited enforcement relief.

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FINRA Focus: What Happened With Restitution in 2016?

Evershed Sutherland’s annual analysis of FINRA’s  disciplinary actions indicates that FINRA fined firms and individuals a record-setting $176 million in 2016.. In addition, it ordered $28 million in restitution in 2016.

But. . .

  • How did 2016 compare to previous years, including 2015’s record-breaking year?
  • What types of cases triggered orders of restitution from FINRA in 2016?
  • What should firms expect in 2017?

View the analysis here

Additional contributor to this post:

Brian L. Rubinbrianrubin@eversheds-sutherland.com

Analysis of FINRA Cases Shows Record-Breaking 2016

Eversheds Sutherland (US) LLP has completed its annual study of the disciplinary actions reported by FINRA in 2016.  Key takeaways:

  • In 2016, the amount of fines ordered by FINRA shattered its previous record set in 2014
  • While the number of cases reported was on par with prior years, the amount of restitution declined significantly from 2015’s record total
  • Top enforcement issues and emerging trends for FINRA

View the results here

Additional contributor to this post:

Brian L. Rubinbrianrubin@eversheds-sutherland.com