2 SEC Commissioners To Exit

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Brokerdealer.com blog update profiles the shake up in one of the brokerdealer’s governing bodies, the Securities and Exchange Commission (SEC), is about to get. The White House is already in search of a replacement for Democratic commissioner Luis Aguilar and now they will also have to find a replacement for Republican commissioner Daniel Gallagher. This brokerdealer.com blog update is courtesy of InvestmentNews’ article, “SEC’s Daniel Gallagher resigning as commissioner“, with an excerpt below.

Daniel Gallagher is resigning his post as a Republican member of the Securities and Exchange Commission after four years, a time marked by partisan battles over the regulatory response to the 2008 financial crisis,according to three people familiar with the matter.

The White House will now need to replace him as well as Luis Aguilar, the Democratic commissioner whose term expires next month. The departures herald a transformation at the agency, which has struggled to write dozens of new regulations arising from the 2010 Dodd-Frank Act.

Mr. Gallagher, 42, plans to remain on the five-member commission until a successor is confirmed, a process that could take several months, the people said. The White House has already identified candidates to fill both his and Mr. Aguilar’s seats.

A securities lawyer and ex-agency staff member, Mr. Gallagher has been a critic of many of the rules required by Dodd-Frank. Known for his forceful dissents and speeches, he frequently rapped the Federal Reserve for trying to impose its oversight on firms traditionally regulated by the SEC.

While Mr. Gallagher clashed with former Chairwoman Mary Schapiro on policy matters, he has a less-strained relationship with current SEC chief Mary Jo White. He was instrumental in negotiating a compromise overhauling rules for money market mutual funds in July 2014, passed during Ms. White’s tenure.

To continue reading about the leadership leaving the SEC, click here.

SEC Locks Retail Brokers Out Of Stock Market Reform Meeting

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Brokerdealer.com blog update profiles the SEC intentionally leaving retail brokers out of their upcoming meeting on stock market reforms. The group will meet four times a year and review old rules and advice the SEC on new regulation. Retail brokers are confused because the SEC has always made it a priority to protect retail investors so leaving retail brokers out of this advising group is raising questions.  This brokerdealer.com update is courtesy of Reuters’ John McCrank in his article, “SEC’s stock market reform club locks out retail brokers” with an excerpt below.

The U.S. Securities and Exchange Commission is convening a group of financial industry veterans for the first time next month to consider stock market reforms, but one group will be conspicuously absent: retail brokerages.

The SEC’s 17-member Market Structure Advisory Committee includes representatives of fund companies, an exchange, off-exchange trading venues, dealers, and academia, among others. The group, which meets four times a year, will review old rules, and advise the SEC on a range of new regulations designed to make sure the market is as stable and fair as possible.

Still, given that the SEC has said its main priority is to protect retail investors, the omission of retail brokers raises questions, because without their point of view the panel may recommend changes that favor institutional investors, analysts said. Retail investors place around 16 percent of all U.S. stock orders.

“There’s a missing gap of protecting retail order flow,” said Larry Tabb, chief executive of capital markets advisory firm TABB Group.

That gap was also noticed by committee member Joseph Ratterman, chairman of No. 2 U.S. exchange operator BATS Global Markets. He said he mentioned his concern to SEC Chair Mary Jo White shortly after the committee was announced and that she was supportive of him, along with committee member Jamil Nazarali, from market making firm Citadel Securities, formally representing retail interests.

To continue reading this article from Reuters, click here.

SEC Advisory Group Proposes BrokerDealer Background Check Database

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Brokerdealer.com blog update profiles the SEC Investor Advisory Committee’s proposal for the SEC to develop a database of brokerdealers and investors’ information regardings secruities law violation in order to protect clients from fraud. This update is courtesy of InvestmentNews’ article, “SEC panel calls for a single database to run background checks on all financial professionals“. with an excerpt from the article below.

The Securities and Exchange Commission should develop a database that compiles information about securities law violations and is easy to use for investors, especially the elderly, an advisory group said Thursday.

In its quarterly meeting at SEC headquarters, the SEC Investor Advisory Committee floated a proposal to have the SEC work with other federal and state financial regulators to develop a single website to house disciplinary information about investment advisers, brokers and other financial professionals. As a step toward that goal, an IAC subcommittee suggested the agency provide a single portal for investors to access information in SEC and Finra databases.

The proposal likely will be voted on by the full IAC at the group’s July meeting.

“This is something from an investor protection perspective, which certainly is the mission of this committee, [that] can play a very important role for the public,” Ms. Sheehan said.

To read the entire article from InvestmentNews, click here.

 

Are You A Fiduciary? SEC’s Attempts to Create More Distinction

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Brokerdealer.com blog update profiles the financial industry is bubbling thanks to SEC effort to redefine terminology and specifically, who it applies. In this case, the confusion comes in with who is a fiduciary and who isn’t.  This blog update is courtesy of The Philadelphia Inquirer columnist, Erin Arvedlund. The excerpt below comes from both Arvedlund’s blog and her Monday column, “Monday Money Tip: Beware financial advisers who are not fiduciaries“.

arvedlund-150x150Before you sign on with a money manager, ask: Are you a fiduciary? If yes, great. If not, go in with your eyes open.

Fiduciaries, by law, have to do the right thing by their clients. No one on Wall Street wants, by law, to have to do the right thing.

Some street professionals are fiduciaries; registered investment advisers generally are, brokers are not.

And the distinction grows every day.

Anyone whose job is to raise sales cannot meet the fiduciary standard, notes Knut Rostad, president of the Institute for the Fiduciary Standard.

“Brokers may provide useful product recommendations, but they cannot meet the fiduciary standard,” Rostad says.

“They can no more provide objective advice about investments than can the Ford car salesman objectively advise on cars. They may be terrific people but, by virtue of what they do, they will most assuredly provide terrible advice.”

The issue is confusing, and Wall Street wants to keep it that way.

Read the entire article from the The Philadelphia Inquirer, here, and for more financial commentary, click here for Erin Arvedlund’s blog.  

Ex-New Jersey Broker Dealer Has A Good Time On His Clients’ Dollars

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Brokerdealer.com blog update profiles ex-New Jersey broker dealer, Evan Kochav, who stole more than $500,000 from clients and using it spend on poker at casinos and football tickets. This brokerdealer.com blog update is courtesy of NJ.com’s reporter, Christopher Baxter “Ex-N.J. stock broker indicted for stealing $562K from clients for poker, football tickets“. An excerpt from NJ.com is shown below.

A Jersey City man has been indicted for stealing $561,745 from clients of his investment firm and spending the money on personal expenses including poker at casinos and football tickets, state authorities said today.

From 2012 to 2014, Evan Kochav, 33, allegedly stole money from 10 investors he had solicited through his Red Bank-based firm, White Cedar Group, which he marketed as an economic consulting firm that had links to investment and business groups worldwide.

But authorities said the business was a front for Kochav, a professional poker player, to divert money to himself in order to pay for his gambling at casinos in New Jersey, Pennsylvania and Florida and on at least two poker websites.

He also allegedly transferred money to his wife and paid for shopping, dining, air travel, hotels, football tickets and other entertainment. A small sum was paid to his investors in order to cover up the scam, authorities said.

“Kochav bluffed investors like the poker player he is, claiming ties with lucrative business ventures around the globe to convince clients their hard-earned money was securely invested,” acting state Attorney General John Hoffman said.

The indictment, handed up by a state grand jury Monday, charged Kochav with theft by deception, money laundering, misconduct by a corporate official and writing bad checks for more than $85,000 to a client who had questioned what happened to his money.

For the entire article from NJ.com, click here.