Wealth & Risk Management Blog

William Byrnes (Texas A&M) tax & compliance articles

Posts Tagged ‘Wall Street’

Wolf of Wall Street Back With a Pack, Seeking Vengeance

Posted by William Byrnes on September 22, 2014


International Financial Law Prof Blog

…bankers and brokers defiantly have hardened in their quest for bigger and bigger paydays. Wolf of Wall Street? What we’re seeing is a pack of wild dogs that continue to use any means necessary to line their pockets no matter the fines, convictions and settlements that regulators throw at them.

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Better Late than Never: SEC Implements the Switch

Posted by William Byrnes on January 10, 2012


As anticipated, the SEC will delay implementation of the RIA transition. On June 22, the SEC approved rules that will transition thousands of advisors from SEC to state regulation, but the new rules won’t be effective until June 28, 2012, almost a year later than initially expected.

Under the regulatory structure in place before the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act, investment advisors with $25 million or more in assets under management (AUM) were regulated by the SEC, and those with less than $25 million in AUM were regulated by the states. Dodd-Frank changed the registration threshold so that advisors with between $25 and $100 million in AUM—so-called “midsize advisors”—will be required to withdraw their registration from the SEC and register with state regulators.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the planned switch and in Advisor’s Journal, see Disarray at the SEC is Complicating the “Switch” (CC 11-83), Hedge Funds Must Now Register with the SEC under the New Wall Street Reform Act (CC 10-45) & Dodd-Frank Wall Street Reform and Consumer Protection Act (CC 10-35).

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Are Indexed Annuities Securities?

Posted by William Byrnes on November 8, 2011


Last year Congress finally concluded about whether indexed annuities are securities. As a security, indexed annuities were  subject to regulation by the SEC by including a provision in the in the Dodd-Frank Wall Street Reform Act that defines indexed annuities as insurance products outside the agency’s jurisdiction.

This year, some states are refusing to take Congress’s “NO” for an answer. In the latest action on the issue, Illinois Secretary of State Jesse White issued an order on May 24 indirectly concluding that indexed annuities are securities under Illinois law.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of indexed annuities in Advisor’s Journal, see Indexed Annuities: Still Insurance (CC 10 42).

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FINRA Puts Disciplinary Histories on Web

Posted by William Byrnes on September 29, 2011


Disciplinary histories are becoming easier to access. Brokers’ disciplinary histories are now prominently displayed for the web savvy public; they’re no longer filed away at the Financial Industry Regulatory Authority (FINRA), where only the most diligent investors will find them. FINRA has made your disciplinary history freely and easily available to the public by launching a web-accessible discipline database.

Whether the easy accessibility of the information is a  beneficial will depend on a broker’s history. Those with a clean record will undoubtedly benefit from the easy accessibility of the information and the ease with which clients and prospects can search their record and compare it to others. Those with a negative history, whether deserved or not, may now find themselves on the defensive with prospects more often.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of FINRA complaint and disciplinary procedure in Advisor’s Journal, see FINRA Rule 45-30: Expansive New Complaint Report Requirements (CC 11-96) & Broker Bonus Arbitration Bottleneck Forces FINRA to Reconsider Arbitrator Qualification Standards (CC 11-08).

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Is Barney Frank’s Resolve to Implement Dodd-Frank Weakening?

Posted by William Byrnes on September 1, 2011


Facing the onslaught of Republican legislative attempts to weaken Dodd Frank, Barney Frank (D-MA) seems unconcerned. His unwillingness to push for the prompt implementation of Dodd-Frank suggests that his resolve is weakening. And in recent weeks, Representatives have used the implementation lull to introduce a handful of bills that, if passed, would repeal or delay parts of the Dodd-Frank Wall Street Reform Act.

Dodd-Frank implementation was originally scheduled to launch July 21, but Mr. Frank has no reservations against allowing agencies more time to translate the abundant volume of provisions of the  reform into regulations. “There’s no gun at their heads. Nobody gets fired,” he stated.

However, by allowing for this delay, Mr. Frank risks giving the Republicans time to repeal Dodd-Frank one provision at a time.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of Dodd-Frank financial reform in Advisor’s Journal, see Republicans Look to Erode Dodd-Frank (CC 11-75).

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SEC Moves to Require Full of Disclosure of Incentive-Based Compensation

Posted by William Byrnes on July 15, 2011


Investment advisors and broker-dealers may be required to disclose their incentive-based compensation programs under proposed rules approved by the Securities and Exchange Commission (SEC) on March 2. The proposed rule is the latest in a series of advisor and broker-dealer reporting rules issued under the mandate of the Dodd-Frank Wall Street Reform Act.

The rapidly increasing compliance obligations for advisory firms and B-Ds has the capability to drastically modify business practices at affected firms. Many will be forced to reconfigure their entire compensation program to comply with the new rules.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of advisor reporting requirements in Advisor’s Journal, see Advisors Hit with Another Round of SEC Reporting Rules (CC 11-30).

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The Financial Crisis Inquiry Report

Posted by William Byrnes on April 5, 2011


Why is this Topic Important to Wealth Managers? This topic discusses the evaluation report of the financial crisis issued by a Congressionally appointed body. The report presents discussion of events and causes leading up to the ordeal, as well as indications and factors which presented its forthcoming. The discussion is aimed to allow wealth managers to intelligently discuss some causes of the financial crisis with clients and colleagues.

There was a new report issued earlier this year by the Financial Crisis Inquiry Commission, which was created to “examine the causes of the current financial and economic crisis in the United States.” [1] In this report, the Commission presents to the President, the Congress, and the general public the results of its examination and its conclusions as to the causes of the crisis.

The Commission was established as part of the Fraud Enforcement and Recovery Act passed by Congress and signed by the President in May 2009. [2] The independent panel was selected by Congress and composed of private citizens with experience in areas such as housing, economics, insurance, market regulation, banking, and consumer protection.

The report is intended to provide a historical accounting of what brought our financial system and economy to a precipice and to help policy makers and the public better understand how this calamity came to be.

Below are some of the findings issued in the report:  Read the analysis at AdvisorFYI

 

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Dodd-Frank Aftermath: CFTC Rule Making Process Stalls

Posted by William Byrnes on February 23, 2011


Despite Congress’s best efforts after the recent economic meltdown, a cadre of Wall Street’s biggest banks still dominates the derivatives markets, leaving some observers wondering whether the transparency the Act was supposed to bring was just a well-intentioned but overly optimistic dream.

The Dodd-Frank Wall Street Reform Act (Act) gave the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) extensive new authority over participants in the derivatives and swaps markets. But the transparency and equity many hoped the Act would bring to the markets is bottlenecked in the agencies charged with implementing the legislation.

The CFTC was scheduled to consider conflict of interest rules for swap execution facilities, derivatives clearing organizations and designated contract markets at their January 13, 2011 meeting, but disagreement about the scope of the rules resulted in the items being nixed from consideration at the meeting.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the Dodd-Frank Act in Advisor’s Journal, see Dodd-Frank Wall Street Reform and Consumer Protection Act (CC 10-35) and Wall Street Reform Act Mandates Study of Financial Planning Industry (CC 10-73).

 

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Broker Bonus Arbitration Bottleneck Forces FINRA to Reconsider Arbitrator Qualification Standards

Posted by William Byrnes on February 7, 2011


Brokerages are increasingly looking to claw back signing bonuses from bonus baby brokers who leave for another firm. Signing bonuses at the big broker-dealers saw a big jump in 2008, just as the economy took a dive. Signing bonuses of up to $3 million were being offered to brokers who generated $1 million in commissions and fees in the prior year. And a few bonuses paid at Wall Street firms were reported to have been as high as $10 million. But because many of the bonuses were based on the prior year’s inflated numbers, brokerage firms ended up paying too much for too little performance during an economic slowdown.

Now a bottleneck is developing in arbitration cases dealing with brokers’ signing bonuses, forcing FINRA to reduce the qualifications for persons serving as arbitrators in order to expand its rolls and push the cases through the system. About 1,100 bonus cases have been filed by brokerages as of December 12, compared to just 415 cases in 2008. About 17 percent of 2010 FINRA arbitration cases were bonus-related cases.  Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of broker and securities arbitration in Advisor’s Journal, see FINRA Proposes Eliminating Industry Insiders from Arbitration Panels (CC 10-80) and Mandatory Securities Arbitration Clauses on the Chopping Block (CC 10-48).

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Study Finds that Universal Fiduciary Standard Will Hurt Investors

Posted by William Byrnes on December 6, 2010


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The Wall Street Reform Act1—signed into law by President Obama on July 21, 2010— grants the SEC the power to impose a fiduciary duty on broker-dealers. Although the SEC has not yet moved to apply the fiduciary standard—already applicable to registered investment advisors—to broker-dealers, both sides of the argument have made their voices heard, commissioning studies and sending volleys of comments to the SEC.

Holding broker-dealers to a higher standard would seem, at first glance, to be a positive for their customers.  But a November 1, 2010, Securities Industry and Financial Markets Association (SIFMA) commissioned study calls into question whether applying a fiduciary standard of conduct to all brokerage activities would help investors.  Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the fiduciary standard of conduct in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10 40).

We invite your questions and comments by posting them below or by calling the Panel of Experts.

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Wall Street Reform Act Mandates Study of Financial Planning Industry

Posted by William Byrnes on October 26, 2010


The federal government is taking the first steps toward regulating financial planners. The Financial Planning Association and other industry groups are welcoming the prospect of federal oversight. The federal push toward regulation is motivated by a perceived widespread misuse of “Financial Planner” and other similar designations.

The Wall Street Reform Act requires the Government Accountability Office to study state and federal regulation of persons who hold themselves out as financial planners. The study will consider whether there are regulatory gaps in federal and state law that permit unregistered financial planners and others who provide planning services to escape regulation. The use of �misleading titles, designations and marketing materials� by financial planners will also be scrutinized to determine whether current law adequately protects consumers.

Read this complete article at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of the Dodd-Frank Wall Street Reform Act in Advisor�s Journal, see Dodd-Frank Wall Street Reform and Consumer Protection Act (CC 10-35)Hedge Fund Must Now Register with the SEC Under the New Wall Street Reform Act (CC 10-45), & The Federal Insurance Office.

We invite your questions and comments by posting them at AdvisorFYI or by calling the Panel of Experts.

 

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The Federal Insurance Office

Posted by William Byrnes on September 28, 2010


Although regulation of insurance generally has been left to the states, the Wall Street Reform Act may foreshadow future federal oversight of the industry. The Act creates the Federal Insurance Office (FIO) within the Treasury, which will monitor all components of the insurance industry—excluding the health, crop, and long-term care sectors.

Today’s analysis by our Experts William Byrnes and Robert Bloink is located at AdvisorFX Journal The Federal Insurance Office

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