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February 2014 Archives

Regulators to Review Member Firms Cybersecurity Vulnerabilities

The Financial Industry Regulatory Authority (FINRA) will be reviewing twenty member firms in the coming months to evaluate the measures in which they take in protecting themselves against cybersecurity threats. FINRA wants to assess what types of threats are most prevalent and where firms are most vulnerable. FINRA is making this review a priority task. Cybersecurity is vital to ensuring that client information stays confidential and safe. The Securities and Exchange Commission (SEC) also has expressed concerns about cybersecurity and is planning unannounced examinations of firms. Both regulators are hoping their evaluations will enhance investor protection.

Philip Seymour Hoffman's Outdated Estate Plan May Cost His Family Millions

According to an Investment News' report, Philip Seymour Hoffman may have left his longtime companion and the mother of his three children, Marianne O'Donnell, with a large tax bill and outdated will. Under Hoffman's will, which was filed with New York City Surrogate's Court earlier this week, Hoffman left everything in his estate to O'Donnell. The couple was not married at the time of Hoffman's death and the estate will not be able to take advantage of the estate tax breaks reserved for spouses. Hoffman's will gives O'Donnell the option of disclaiming all or part of her inheritance which would allow the property to pass into a trust for the benefit of their oldest son. Unfortunately, Hoffman's two daughters were not born at the time the will was executed and were not named beneficiaries of the trust.

Regulators Keeping Close Eye on Alternatives and Complex Products

Earlier this year, the Financial Industry Regulatory Authority (FINRA) issued their 2014 Regulatory and Examination Priorities letter which outlines their annual goals to assist investors. The letter also included a number of product concerns. Among those products were alternatives and complex structure products.

Stifel Nicolaus and Century Securities Ordered to Pay $1 Million

Stifel Nicolaus and Company, Inc. and Century Securities Associates, Inc. were ordered to pay over one million dollars by the Financial Industry Regulatory Authority (FINRA) due to alleged sales practice abuses in connection with the sales of leveraged inverse exchange traded funds (ETFs). Since ETFs are so complex, it is imperative for the brokers to have the proper education before recommending them to clients. FINRA discovered that both firms' employees did not have a firm understanding of all the risks involved with ETFs. FINRA further found that Stifel and Century did not have the acceptable supervisory rules and guidelines in place that could have prevented the improper sales of the ETFs. According to FINRA's press release, "Stifel agreed to pay a fine of $450,000 and to make restitution of nearly $340,000 to 59 customers. Century agreed to pay a fine of $100,000 and to make restitution of more than $136,000 to six customers."

Beverly Hills Broker Bambi Holzer Barred From Securities Industry

In October 2013, Bambi Holzer, a Beverly Hills based broker to the rich and famous, was suspended from the financial industry after allegations of falsifying customer documents. Unfortunately for Holzer this was not her first time facing allegations of wrongdoing the Financial Industry Regulatory Authority (FINRA). Holzer's FINRA disciplinary report or "CRD" is 115 pages long with customer complaints alleging millions in damages. According to the Wall Street Journal, out of the approximately 550,000 registered brokers with FINRA, Holzer is in the top ten in terms of the number of customer complaints. In October, FINRA moved to bar Holzer from the industry. Holzer agreed to settle FINRA's allegations of wrongdoing.


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