Municipal Bonds – Safe Bet or Risky Proposition?

By: Timothy Guilmette, Spring 2014 Student Intern

rouletteMany long-term investors have some portion of their portfolios allocated to various types of bonds, and traditionally municipal bonds have been considered a relatively safe investment choice. After all, it’s the government we’re talking about. Unfortunately, the recession of the past decade has revealed that not all municipal bonds are created equal. In fact, the SEC has recently stepped up enforcement action against several municipalities around the country for securities violations related to misrepresentations made to investors. This post will provide some basic information on municipal bonds and provide some helpful links for investors who are thinking about investing in municipal bonds.

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“Common” Securities Claims

By Timothy Guilmette, Spring 2014 Student Intern

common lawSome investors seek advice from financial professionals when making investment decisions, and others use financial professionals to manage their financial affairs. Unfortunately, professionals make mistakes, communications get crossed and some even act contrary to their clients’ interest. If an investor feels like they were wronged, he or she may have the right to bring legal action against the individual or organization they work for, or both. There are many different claims one can assert in securities arbitrations. Today we are focusing on one type of claim: matters that arise under the common law. This post will discuss two common law claims that are frequently seen in FINRA dispute resolution proceedings: fraud and breach of fiduciary duty.

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Does This Investment Suit Me?

By Timothy Guilmette, Spring 2014 Student Intern


suitableInvestors today have more choices than ever before, and many investors feel more comfortable developing investment strategies with assistance from a licensed brokerage firm. Brokerage firms have associated persons (commonly referred to as brokers) who buy and sell securities on behalf of investors and make recommendations based on the investor’s individual investment profile. Brokerage firms and their associated persons, are required to gather specific information from a client before making recommendations.

Financial Industry Regulatory Agency (FINRA) Rule 2111, Suitability, places a duty on brokerage firms and their associated persons to “. . . have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the [firm] or associated person to ascertain the customer’s investment profile.” Let’s break that down and learn more about the Suitability Rule.

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Investor Advocacy Clinic Comments on FINRA Proposed Rule Change 2014-020

By Nataliya Obikhod (Nemtseva), Spring 2014 Student Intern

The GSU Investor Advocacy Clinic is committed to protecting the interests of individual investors. Therefore, in addition to providing legal services and participating in investor education and outreach, the clinic is also actively involved in the public comment process relating to rule changes proposed by FINRA.

The Proposal: SR-FINRA-2014-020

FINRA has recently proposed SR-FINRA-2014-020, which would prohibit FINRA members from conditioning settlements of customer disputes or compensating aggrieved investors in such disputes for agreeing to expunge or refrain from opposing an expungement of the dispute from the public record. Generally, when customer disputes against brokers or brokerage firms arise, this information is recorded on the Central Registration Depository (CRD) and made available to investors through FINRA’s BrokerCheck. Although records of customer disputes are only eligible for expungement in extraordinary circumstances, such as in cases when there has been a mistake as to the broker’s identity, a study conducted by PIABA revealed that expungements were often granted in circumstances not intended by the original rule. Through its proposed rule change, FINRA seeks to address this issue by preventing expungements from being granted as a result of settlement agreements reached between aggrieved investors and their brokers in customer disputes.

The Clinic’s Comment

file not foundOn May 1, 2014, the clinic submitted a comment letter, expressing its support for adopting this rule change. Although agreeing to expungements may seem to an aggrieved investor like a small price to pay to settle a dispute, expunging the record of such dispute is harmful to other investors, who rely on the information in the CRD when selecting brokers. SR-FINRA-2014-020 is a great step toward ensuring that expungements are granted in the limited circumstances for which they were intended and investors have access to important information about brokers with whom they consider working. To ensure that this rule change achieves the intended purpose, the clinic recommended that FINRA monitor the number of expungements and circumstances in which they are granted after the rule is adopted and that FINRA revisit the issue if necessary.

For more information on expungements under FINRA Rules, see our earlier blog posts dedicated to this topic.


The primary student author of the comment letter, Timothy Guilmette, was assisted by student interns Nataliya Obikhod (Nemtseva) and Thomas Abrahamson.

Clinic Interns Present Investor Education to GSU ROTC Cadets


On Tuesday April 22, 2014, Investor Advocacy Clinic student interns Thomas Abrahamson, Timothy Guilmette and Nataliya Nemtseva presented “Take Charge of Your Financial Future” to a group of Georgia State University ROTC cadets.  The early morning session began with Lt. Col. William J. Brooks, PhD, describing the risk of fraud that members of the military face, the importance of the topic and introducing the interns.

ROTCAfter Colonel Brooks turned the presentation over to the clinic interns, Timothy Guilmette recounted his own twelve year military career and discussed the importance of financial readiness.  Nataliya Nemtseva provided an overview of the FINRA Investor Education Foundation 2012 National Capability Study’s findings concerning military members and financial preparedness.  According to Nemtseva’s review of the study, nearly 50% of military members break even or spend more than they earn, 50% do not invest outside of military retirement and 43% do not have emergency funds. Thomas Abrahamson then discussed the importance of budgeting and taught the cadets where to start.  Guilmette provided an overview of a Leave and Earning Statement (LES) to help cadets begin budgeting and provide them with the skills to counsel the soldiers they will soon lead.  The interns also provided practical tips for managing and getting out of debt and setting up an emergency fund.  The formal session concluded with a discussion of the importance of planning and investing now.  Cadets asked several questions concerning budgeting, saving and investing.

Acoint the conclusion of the presentation, clinic interns provided the cadets with additional educational materials to learn more about this important topic, including’s excellent publication Money & Mobility: For Military Personnel and Families.

Colonel Brooks thanked the clinic interns by presenting them with the unit’s coin.

The Investor Advocacy Clinic thanks Colonel Brooks and the Georgia State University ROTC for the opportunity to meet with these future leaders.  We look forward to continuing to collaborate in the future.


Clinic Students to Present Investor Education During Financial Literacy Month

April is financial literacy month, and the Investor Advocacy Clinic’s student interns are making sure that potential investors have the information they need to make wise financial decisions.

On Tuesday, April 22, interns Thomas Abrahamson, Timothy Guilmette and Nataliya Nemtseva will meet with cadets in Georgia State University’s ROTC.  Their presentation, “Take Charge of Your Financial Future,” will discuss financial readiness, budgeting, saving and planning for the future and is tailored for members of the military.

On Wednesday, April 23, graduate research assistant Dylan Donley and fall 2013 student intern D. Russell Stroud will present “There’s no Such Thing as a Free Lunch: Getting to Know the Red Flags of Fraud and Common Scams Against Seniors” to a group of law students studying elder law.  This presentation will educate future lawyers interested in working with seniors, providing them with information and tools to protect seniors from scams.

On Tuesday, April 29, student interns Scott Evans, Benjamin Stubbs and Patricia Uceda will present “Guidance for Your Investment Journey” at the Georgia State University College of Law to current law students in Room 330 at noon.  This presentation will help new investors learn how to protect themselves from becoming victims to investment fraud and make wise decisions as they save for their future.

Each of these presentations is made possible by a grant from the FINRA Investor Education Foundation.

Interested in an investor education presentation for your organization?  Call us at (404) 413.9270 and we would be happy to discuss how the clinic can create a presentation tailored to your audience.

Investor Advocacy Clinic Comment Highlights Importance of Protecting Investors’ Confidential Information

The  Investor Advocacy Clinic is dedicated to protecting investors’ interests. One way in which we accomplish this is by closely monitoring rule changes that may affect individual investors.

FINRA periodically revises its arbitration rules to update or improve the arbitration process. Before any new rules or changes to rules may be adopted, the proposed rule is provided to the public for comment. Comments are reviewed and taken into consideration when deciding whether to modify an existing rule or adopt/reject a new rule. As such, the Investor Advocacy Clinic endeavors to participate in this critical process to protect investors.

The Proposal: SR-FINRA-2014-008

FINRA proposal SR-FINRA-2014-008 suggests changes to how confidential investor information is handled in certain aspects of arbitration proceedings. The changes include requiring parties to redact or remove parts of personal identifiers, such as social security numbers, and gives investors thirty days to correct redaction mistakes and resubmit properly redacted versions.

The Clinic’s Comment

On March 14, 2014, the clinic submitted its comment on the proposed rule change. Overall, the clinic expressed support for the proposal’s goal, but recommended broadening the rule to cover more confidential information in every situation where investors’ confidential information is being exchanged. Federal courts have similar rules requiring the redaction of sensitive information and the proposed rule change seeks to move FINRA proceedings in the same direction, though the clinic noted the FINRA proposal could go further, mirroring the protections available in federal courts. The clinic feels our proposed additions will better protect investors’ personal information.

Protecting investor information is important to the clinic, and we will continue to submit comments to other rules that impact investor interests.

The primary student author, Natalya Nemtseva, was assisted by student interns Timothy Guilmette and Thomas Abrahamson in drafting the clinic’s comment.