Registered Representatives Tag Archives

SEC Fines Investment Adviser Over Variable Representative Compensation Disclosures

July 27, 2021 | Bryan Gort

On July 13, 2021, the Securities and Exchange Commission (“SEC”) published an order instituting administrative cease-and-desist proceedings against TIAA-CREF Individual & Institutional Services, LLC (“TIAA”). TIAA consented to this order without admitting or denying the findings except as to jurisdiction and subjection matter. The SEC’s order alleges TIAA failed to properly disclose conflicts of interest and made materially misleading statements concerning rollover recommendations they made to clients over a five-year period from 2013 to 2018.

TIAA’s policies and procedures required their investment adviser representatives, who were also dually registered as registered representatives, to present clients with four options regarding rollover recommendations when providing financial planning services. The options were:

Leave client assets in their employer-sponsored retirement plans;
Rolling the assets into a self-directed individual retirement account;
Rolling over the assets to a new employer’s plan; or
Cashing out the account value/taking a lump-sum distribution.

Georgia Commissioner of Securities Proposes Amendments to Broker-Dealer and Investment Adviser Examination Requirements to Incorporate FINRA SIE Exam

March 1, 2019 | Elizabeth Dalziel

On February 4, 2019, the Commissioner of Securities of the State of Georgia and the Office of the Secretary of State announced its intent to amend the rules governing examination requirements for registered representatives of a broker-dealer and investment adviser representatives. According to the Commissioner, the primary purposes of these amendments are to harmonize Georgia’s rules with the Financial Industry Regulatory Authority’s new rules implementing the Securities Industry Essentials (“SIE”) Exam and to update the requirements regarding examinations to applicants. The SIE Exam, which tests a FINRA registration applicant’s knowledge of securities-related topics, was launched to simplify FINRA’s qualification examination program after the program’s efforts to address new securities products and services resulted in FINRA offering multiple exams with immense content overlap. FINRA also launched the SIE Exam in order to provide greater consistency and uniformity to the securities industry application process.

The State of Georgia requires applicants for registration as a registered representative of a broker-dealer and/or an investment adviser representative to take certain prerequisite examinations. Georgia Rule 590-4-5-.02 details the examination requirements for registered representatives, while Georgia Rule 590-4-4.09 details the examination requirements for investment adviser representatives.

The proposed amendments to Rule 590-4-5-.02, detailing registered representative examinations, would require an applicant applying for registration as a broker-dealer to present proof to the Commissioner that its personnel have passed at least one of a list of specified examinations within a two-year period preceding the date of the application. The amendments also eliminate the Series 87 Research Principal Examination as a potential examination that could be passed. The amendments also would provide that an applicant who is applying to be a registered representative would need to present the Commissioner with proof that he or she has passed the required examinations within either a two-year period immediately preceding the application date or a four-year period in the case of an applicant who has taken the SIE Exam. The amendments also provide that the Commissioner “may reserve the right to find the applicant qualified by other examinations or significant and comprehensive experience in the securities business.”

Morgan Stanley Announces Withdrawal From Broker Protocol

November 3, 2017 | Elizabeth Dalziel

On October 24, 2017, Morgan Stanley declared that it has decided to withdraw from the Protocol for Broker Recruiting (“Protocol”). Morgan Stanley stated that the Protocol is “replete with opportunities for gamesmanship and loopholes” and that the Protocol is “no longer sustainable.” It believes that leaving the Protocol will be beneficial for its growth as a company. However, it is expected that Morgan Stanley’s withdrawal from the Protocol might bring significant consequences to the investment management industry, including potentially the end of the Protocol itself. Continue reading ›

FINRA Implements New Rule Requiring “Educational Communication”

December 7, 2016 | Elizabeth Dalziel

On March 23, 2016, the Securities and Exchange Commission (“SEC”) approved the adoption of FINRA Rule 2273, a rule first proposed by the Financial Industry Regulatory Authority (“FINRA”) on December 16, 2015. Rule 2273 provides that member firms who hire or associate with a registered representative must provide an “educational communication” to the representative’s former and current customers. The education communication is designed to provide customers with guidance regarding their decision whether to remain customers of that representative. Rule 2273 went into effect on November 11, 2016.

FINRA’s stated purpose for proposing Rule 2273 was to provide “customers with a more complete picture of the potential implications of a decision to transfer assets.” The belief was that otherwise, customers would simply rely on their “experience and confidence” with the representative. FINRA found that such experiences alone do not always guarantee that staying with the representative will be in the customers’ best interests. Thus, FINRA proposed the educational communication, which contains a number of questions that FINRA believes customers should ask themselves before deciding to remain with the representative. Continue reading ›

FINRA Suspends and Fines Adviser for Altering CRM Record

June 15, 2016 | Steve Parker

Last month, the Financial Industry Regulatory Authority (“FINRA”) suspended an Ameriprise registered representative for one year and fined him $50,000 for altering a record in the client relationship management (“CRM”) software that the adviser used in his Ameriprise office. This enforcement case points to the dangers for broker-dealer representatives and registered investment adviser representatives alike, in editing or altering records relating to interactions with clients.