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.

Clinic II Allowed Me to Make the Jump from Student to Attorney

By: Jason Robinson, Fall 2015 Student Intern

DSC_0135My time in Clinic II gave me the opportunity to practice the knowledge and skills that I learned as a Clinic I intern. Securities arbitration sponsored by the Financial Industry Regulatory Authority (FINRA) is a specialized area of law with a steep learning curve. I am glad that I decided to do Clinic II because it allowed me to work with new clients and take on more responsibility. Over the course of the semester we filed two statements of claim, drafted two comment letters, wrote blog posts, and facilitated a presentation on how to recognize investment fraud. Our professor constantly challenged us to take ownership of our cases and dictate the direction that we thought best served the interests of our clients.

While working in Clinic II I also took a class in Securities Regulation and Advanced Legal Writing, both included subject matter that complemented my day to day work in the Clinic. As a law school student it can be difficult to make the jump from a student to being an actual attorney, and the Clinic allowed me to take those first steps under the guidance of experienced lawyers. I would recommend the Clinic to any student who wants to dip their feet in an interesting area of law and gain valuable practical skills in the process. Along with all I have learned in the clinic I also take away a great amount of satisfaction from knowing that I served individuals in the community who did not have the means to pay for legal representation on the free market.

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.

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.

FINRA Orders Firms to Pay $18 Million in Restitution to Charities and Retirement Accounts

By: Jason Robinson, 2015 Student Intern

On October 27, 2015, the Financial Industry Regulatory Authority (FINRA) announced that it had ordered five firms to pay restitution payments totaling $18 million. The sanctioned firms and their respective fines were: Edward D. Jones & Co., L.P. – $13.5 million; Stifel Nicolaus & Company, Inc. – $2.9 million; Janney Montgomery Scott, LLC – $1.2 million; AXA Advisors, LLC – $600,000; and Stephens Inc. – $150,000. The fines stem from the firms’ failure to waive mutual fund sales charges for eligible charitable organizations and retirement accounts. To read FINRA’s news release about these sanctions click here. Continue reading