Clinic Comments on FINRA Proposal Concerning Financial Exploitation of Vulnerable Adults

Investor Advocacy Clinic interns Christopher Pugh, Jason Robinson and Darius Wood recently filed a comment on FINRA Notice 15-37, a FINRA proposal to change several rules in an effort to protect seniors and vulnerable adults from financial exploitation.

The Clinic’s comment, available in full here, supported the proposed rule changes to the extent they aim to protect investors from financial exploitation. The Clinic suggested several changes to increase the proposal’s efficacy.  First, the Clinic believes that if it is suspected that financial exploitation may occur, a firm should act and must not be given a safe harbor from liability unless it takes action to protect a customer.  Second, we recommend that the obligation to act be expanded to include the front line representatives working with customers.  Third, the proposal should require training created by FINRA and incorporated into its continuing education requirement for associated persons.  Fourth, we believe that a trusted contact individual should not be named unless such a person agrees to undertake the role.  Finally, we recommend that personal information disclosed to anyone other than a customer be limited.

The Investor Advocacy Clinic represents the voice of small consumer investors.  In addition to providing legal representation of small investors who have claims against their brokers, the Investor Advocacy Clinic evaluates and comments on proposed rules that impact the small investor and engages in educational outreach for investors and professionals who work with investors.

Interns Speak About Mitigating Investment Fraud Risk

IMG_2682 (002)On November 18, 2015, Investor Advocacy Clinic II student interns Christopher Pugh, Jason Robinson and Darius Wood taught Georgia State College of Law students how to recognize and prevent investment fraud.  The interactive presentation included a screening of the film Trick$ of the Trade: Outsmarting Investment Fraud.  Interns then led a discussion with participants about the film and how they can use their new knowledge to avoid investment fraud.

Investor Advocacy Clinic Helps Develop Invaluable Skills

By Christopher Pugh, Fall 2015 Intern

I rejoined the Investor Advocacy Clinic this semester after having a great clinical experience the year before. My first clinical semester taught me the basics of securities law such as regulations, procedural rules, and other substantive lessons. My second clinical semester expanded my knowledge of those substantive aspects of practice, but it also developed some intangible skills I will need as a practicing professional.

On the substantive aspects of my second semester in the Investor Advocacy Clinic, I was able to achieve many first time experiences in my legal career. I helped draft two statement of claims for our clients and then filed their cases with FINRA Dispute Resolution. After filing, I drafted demand letters and communicated with opposing counsel on these cases. There is no replacement for the valuable experience gained by going through the entire process of developing your client’s story, putting it on paper with supporting evidence, and then working your way through the filing procedures. The skills I learned working on these cases this semester in clinic will be with me throughout my career.

Additionally, my clinical team worked with potential new clients and worked to educate investors through the clinic’s investor outreach program. We conducted several potential client intake interviews and evaluated the cases. We wrote two comment letters on proposed rules by NASAA and FINRA in an effort to protect vulnerable adults from financial exploitation. And we gave a presentation to law and business students on how to prevent investment fraud.

On the intangible aspects of my education in the Investor Advocacy Clinic, I was able to grow as a professional by engaging with experienced lawyers who helped me develop skills in planning, communication, and reflection. This semester I learned the importance of planning in the practice of law. Knowing what comes next before it arises and being able to anticipate opposing counsel’s responses is essential to practice. Of course, I understood this proposition before this semester in clinic, but I did not know how lawyers achieved this. This semester I learned that good lawyers are also good planners.

Working in a team of three interns, the importance of communicating effectively within our team was essential. With so much work, our team had to learn how to communicate effectively about each other’s work and prioritizing that work. By the end of the semester we were communicating and delegating work more efficiently. So, I learned that good lawyers are also good delegators.

Finally, my clinic work this semester taught me the value of reflecting on your work. Trying to learn from your past mistakes and applying those lessons to the next case will increase efficiency and improve the quality of your work. This semester I learned to apply my past experiences to present problems in a more meaningful way rather than just being thankful that the problem was solved and forgetting about it. As a busy law student, I sometimes have a tendency to not stop and reflect on what just happened, which can cause a repeat of the same mistakes. Clinic has taught me the importance of slowing down to allow for mindful reflection on my work.

My experience with the Investor Advocacy Clinic has taught me about practice in a particular area of law while aiding my transition from student to practicing lawyer. The skills and professional growth I have gained across both of my clinical semesters could not be replicated in a traditional law school class. I would recommend the Investor Advocacy Clinic to any law student who wants to learn a dynamic area of the law and develop certain intangible skills that lawyers need in practice.

Today: Mitigating Investment Fraud Risk

Join the Fall 2015 Investor Advocacy Clinic II student interns today from 12:00 – 1:00 pm in Room 241 for a presentation on mitigating investment fraud risk.  We will be Screening Trick$ of the Trade: Outsmarting Investment Fraud at the Georgia State University College of Law.  Food will be provided.

What am I going to learn?

  • Common ways that Investment Fraud occurs
  • 5 Most Common Investment Fraud Tactics
  • Best ways to Avoid becoming a victim of Investment Fraud

Why does this matter?

People believe that because they are smarter than average or more well-off they are less susceptible to investment fraud; however, the opposite is actually true.

Why should I know about investment fraud?

Most individuals will engage in some type of investing during the course of their lives and understanding who is most susceptible and how to prevent investment fraud is the best way for individuals to protect themselves.

Clinic Comments on Proposed Model Act to Protect Vulnerable Adults from Financial Exploitation

On October 29, 2015, the Investor Advocacy Clinic commented on the North American Securities Administrators Association’s (NASAA) Proposed Model Act to Protect Vulnerable Adults from Financial Exploitation. The Proposed Model Act, available here, aims to protect vulnerable adults from financial exploitation by mandating thatcertain financial services providers and compliance personnel (“qualified employees”) report suspected exploitation to adult protective services and securities commissioners.  The Model Act would also allow such qualified employees to delay certain suspected fraudulent disbursements.

The Clinic’s comment, available in full here, supported the Proposed Model Act because it protects vulnerable adults from financial exploitation.  The Clinic suggested two amendments to increase the protection of vulnerable adults from financial exploitation and increase its effaciacy.  First, the Clinic believes that the Model Act should require education and training on the red flags of financial exploitation for qualified employees to ensure that they report in appropriate circumstances.  Second, the Clinic believes that the Model Act’s coverage of seniors should begin at the age of 65 instead of 60 so that the Model Act is not inconsistent with pre-existing similar statutes.

The Investor Advocacy Clinic represents the voice of small retail investors.  In addition to providing legal representation of small investors who have claims against their brokers, the Investor Advocacy Clinic evaluates and comments on proposed rules that impact the small investor and engages in educational outreach for investors and professionals who work with investors.

Save the Date: Mitigating Investment Fraud Risk

Join the Fall 2015 Investor Advocacy Clinic II student interns on November 18, 2015 from 12:00 – 1:00 pm in Room 241 for a presentation on mitigating investment fraud risk.  We will be Screening Trick$ of the Trade: Outsmarting Investment Fraud at the Georgia State University College of Law.  Food will be provided.

What am I going to learn?

  • Common ways that Investment Fraud occurs
  • 5 Most Common Investment Fraud Tactics
  • Best ways to Avoid becoming a victim of Investment Fraud

Why does this matter?

People believe that because they are smarter than average or more well-off they are less susceptible to investment fraud; however, the opposite is actually true.

Why should I know about investment fraud?

Most individuals will engage in some type of investing during the course of their lives and understanding who is most susceptible and how to prevent investment fraud is the best way for individuals to protect themselves.

Fraud Case Studies: SEC Innovating in Investor Education

By Christopher Pugh, Fall 2015 Intern

The folks at the Securities and Exchange Commission (SEC) have been busy innovating by developing new ways to educate investors on how to spot the red flags of investment fraud. The SEC’s Investor.gov website now has links to Fraud Case Studies that show the scam artists in action. Each case study is a fact pattern that illustrates how a different type of securities fraud scam works.

Currently, there are three case studies that use fictional characters to demonstrate some of the tactics used to scam investors using affinity fraud, Ponzi schemes, and pump and dump schemes. Too Good to Miss, Golden Opportunity, and Inside Scoop each set up the players and then reveals what the potential investor was told by the scam artist before investing in the scam. Finally, each case study ends with a recap of the lessons learned from each hypothetical victim’s ordeal. The Fraud Case Studies are an innovative way to educate the investing public about spotting investment fraud through hypotheticals, which can make difficult concepts more understandable.

For more information on preventing investment fraud, visit the SEC’s Investor.gov website and the SEC’s website at sec.gov.