The Securities Litigation Expert Blog

Lost Gains Securities Arbitration Cases

Posted by Jack Duval

Feb 26, 2020 9:15:30 AM

This post begins a series exploring Lost Gains securities arbitration cases.

A record eleven-year (and nearly uninterrupted) bull market has caused a decline in the number of FINRA securities arbitration claims.  In short, very few investors have lost money during this period.  Indeed, on a calendar year-end basis, the worst annual decline in the S&P 500 price index has been 6.25 percent, in 2018, and this would be even less if dividends were included.

Chart 1:  S&P 500 v. FINRA Annual Arbitration Claims[1]

jack duval accelerant finra suitability fiduciary expert - S&P 500 v. Arbitration Claims chart

In Chart 1, above, it can be seen that since the end of 2008, the S&P 500 price index (green line) has increased by 258 percent and the number of FINRA arbitration claims (red line) has decreased by 47 percent.  These trends are certainly well known to securities litigators.

After this record-setting bull market, one would suspect there would be some FINRA arbitration cases arising from customer accounts that did not appreciate, i.e. that the client lost out on the gains that were to be had.  However, these claims have not been prevalent.[2]

In this post, I will explore some reasons why Lost Gains cases are not more common, as well as the common types of Lost Gains cases that I have seen brought.

First, I need to make a distinction, most claimant’s attorneys make lost gains claims, but tend not to bring lost gains cases.

Lost Gains Claims

In a typical FINRA customer arbitration, the brokerage client has lost money in her account.  The claimant will usually plead damages from the principal (out-of-pocket) loss and what the account would have made if it had been invested suitably, this is known as the market-adjusted damage (“M-AD”).

The M-AD damage is a lost gain claim.  In essence, the claimant is saying, but for the unsuitable recommendations of the broker, her principal would, first, not have declined, and second, it would have appreciated.

Lost Gains Cases

Lost gains cases are different from lost gains claims because, in them, the claimant did not lose money on her investmentd.  That is, the account was profitable (or flat) over the period at issue.

Thus when a lost gains case if brought, it only contains the lost gain damage claim, there is no out-of-pocket loss claim.

Reticence to Bring Lost Gains Cases

I believe attorneys are reluctant to bring Lost Gains cases for a number of reasons, including the following:

First, the claimants are perceived to be unsympathetic.  They either didn't lose money or actually made money, just not as much as they could have but for the allegedly unsuitable investment recommendations or other violative behavior by the broker.

Second, because there are no out-of-pocket losses, the damage claim rests entirely upon the market-adjusted damages theory.  While panels frequently award market-adjusted damages, they are less common than awards of out-of-pocket losses.

Third, since Lost Gains cases are perceived to have the headwinds described above, they are typically only brought for large clients who can make seven- or eight-digit damage claims.  Since fewer investors have accounts large enough to support such claims (likely $10 million or more), this necessarily reduces the number of potential claims.

Despite these issues, lost gains cases are brought, and can be won.

Two Common Fact Patterns in Lost Gains Cases

Although there are many fact patterns that could give rise to a Lost Gains case, I want to discuss two types that I have had experience with.  Importantly, they both involve abusive behavior and are not of the sour grapes variety, i.e. where the market was up 20 percent and the client was only up 17.

Those types are:

  • Where the broker appropriates the investment gains for herself through abusive commissions and/or fee structures, (“broker appropriation”), and;
  • The failure of the broker to follow client instructions (“failure to follow”).

In my next post, I will explore these fact patterns in more detail.

__________

Notes:

[1]      Data obtained from Bloomberg and FINRA.

[2]      This is anecdotal as FINRA arbitration statistics do not track Lost Gains claims.  To get a sense of these case filings, I have surveyed a number of securities litigators across the country.

 

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: Investment Suitability, Lost Gains Cases

The Decline of FINRA Membership and the Litigation Implications

Posted by Jack Duval

Feb 7, 2020 8:52:25 AM

In the six years ending in 2018, the number of broker-dealers ("BDs") shrank by 13.5 percent.  Over the same period, the number of SEC Registered Investment Advisor ("RIA") firms increased by 19.7 percent.[1]

Chart 1: FINRA Broker-Dealer and SEC Registered Investment Advisor Firms[2]

FINRA Broker-Dealer and SEC Registered Investment Advisory Firms - Fiduciary Duties

I expect these trends to continue, if not accelerate.

Firms and/or brokers shifting from BDs to RIAs reflect the trends in the market and what business models are sustainable.  The business model based on generating commissions from transactions in customer accounts is losing to the business model of asset management fees based on the amount of assets in the client's account.  This trend has been in place for well over a decade.

At the same time, both of these business models are under attack by the index investing trend.  However, the RIA model is less subject to declines from indexing because an RIA firm can charge the same fees whether it invests in index funds or actively management funds.

Indeed, many RIA firms are disintermediating asset managers by using index ETFs that the RIA selects.

Something that is hidden in the data in Chart 1, above, is that most BDs are dually registered (meaning they are also RIA firms) so they are acting as fiduciaries for a significant percentage of clients.  This, as will be examined below, is showing up in FINRA arbitration statistics, and has important implications for securities litigations, in-house counsel, and compliance and supervisory implementation.

Changing Trends in Securities Litigation

The decline in the number of broker dealers and the increase in the number of RIA firms would suggest that securities arbitrations will shift from being primarily suitability driven to being primarily fiduciary duty driven.

The shift from BDs to RIAs will also entail a shift in securities arbitrations from being overwhelmingly heard in FINRA forums to those of AAA, JAMS, and other forums.

This will have a number of impacts on attorneys and their clients.

Obviously, the fiduciary standard is much higher than the suitability standard.  (I have written about fiduciary duties extensively here.)  This will benefit claimants and make respondent's cases harder to defend.

For respondents, one offsetting factor could be the fact that BD cases with breach of fiduciary duty claims will be heard in FINRA forums.  FINRA arbitrators who have years of experience hearing suitability claims may not fully appreciate the difference between the suitability and fiduciary standards, even when it is explained to them.

If the cases are in AAA or JAMS forums, the costs will almost certainly be higher than at FINRA.  This comparatively higher cost may be well worth it for claimants (not that they have a choice in most instances) because many AAA and JAMS arbitrators are former judges (and if not, almost always attorneys) who are well versed in the weight and import of fiduciary duties.

Trends in FINRA Arbitration Claim Types

FINRA publishes statistics on arbitration case filings and has broken out customer case filings (that is, excluding cases between member firms) since 2013.

The trends in types of controversy are indicative of the falling number of BDs and rising number of RIA firms and RIA services provided by dually registered BDs.

Table 1:  FINRA Arbitration Claims by Type of Controversy[3]

FINRA Breach of Fiduciary Duty Table

Table 1, above, shows that Breach of Fiduciary Duty claims now comprise 86.9 percent of all customer cases filed, up from 75.9 percent in 2013.  Suitability claims have risen even more, to 66.9 percent in 2019 up from 52 percent in 2013.[4] 

Importantly, these types of claims are not exclusive of one another, and in my experience, almost all Breach of Fiduciary Duty claims will also have a Suitability claim attached.

Trends in FINRA Arbitration Resolutions

It would appear that the increasing number of Breach of Fiduciary Duty claims (and the higher hurdle to defending them) is showing up in FINRA arbitration settlements.

Table 2:  FINRA Arbitration Case Settlements[5]

FINRA Arbitration Settlements Table - Fiduciary Duties

Indeed, in 2019 69.4 percent of arbitrations settled, up from 58.9 percent in 2013.[6]

The correlation between the 17.8 percent rise in settlements and the 14.5 percent rise in Breach of Fiduciary Duty Claims over the same period can be seen clearly in Chart 2, below.

Chart 2:  FINRA Breach of Fiduciary Duty Claims and Case Settlements[7]

FINRA Breach of Fiduciary Duty claims and Case Settlements chart

The Long-Term Effects of a Shift from BDs to RIAs

While the number of FINRA Arbitration claims has fallen to the 3,400 to 4,000 per year range during the post-GFC bull market,[8] the types of claims have shifted, with a notable rise in Breach of Fiduciary Duty claims.

Breach of Fiduciary Duty claims must be prosecuted and defended differently than suitability cases.  As I have written about here and here, the difference is profound.  In short, the defenses to suitability claims will generally fail if a fiduciary standard is operative.

 

The increase of Breach of Fiduciary Duty claims and the shift from BDs to RIAs, are trends that are almost certain to continue, if not accelerate.  They require changes in all aspects of BD compliance, supervision, education and training, and business structure.  BDs doing fiduciary business must be built to do that type of business.  That structure is fundamentally different from the old BD brokerage/suitability structure.

 

For BDs doing an increasing amount of RIA business, being a FINRA member firm will become less and less attractive as their brokerage revenue declines and FINRA membership becomes a source of expensive regulatory oversight.

 

Needless to say, with Breach of Fiduciary Duty claims comprising nearly 87 percent of Customer claims, securities litigators should be honing their chops on fiduciary duty case construction and prosecution.

__________

Notes:

[1]      Investment Advisor Association; “2018 Evolution Revolution: A Profile of the Investment Adviser Profession”; 38.  Available at: https://higherlogicdownload.s3.amazonaws.com/INVESTMENTADVISER/aa03843e-7981-46b2-aa49-c572f2ddb7e8/UploadedImages/resources/Evolution_Revolution_2018_v7.pdf;  Accessed January 30, 2020.

[2]      Id.

[3]      FINRA Dispute Resolution Statistics;  Available at: https://www.finra.org/arbitration-mediation/dispute-resolution-statistics;  Accessed December 31, 2019.

[4]      Id.  I have excluded the other types of controversy for this analysis.

[5]      Id.  “Settled via Mediation” means cases settled with a FINRA mediator.  In the vast majority of instances, “Direct Settlement by Parties” involves a mediation with a third-party, non-FINRA mediator.

[6]      Id.

[7]      Id.

[8]      Id.

 

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, Investment Suitability, Securities Exchange Commission, fiduciary duties, Breach of Fiduciary Duty Claims

SEC Regulation Best Interest - FINRA RN 19-26

Posted by Jack Duval

Aug 8, 2019 8:16:52 AM

 

This blog post continues my series on SEC Regulation Best Interest ("RBI") and the DOL Rule.

 

FINRA RN 19-26 Image

Yesterday, FINRA published its first Regulatory Notice related to RBI, RN 19-26.  This Notice was relatively unremarkable and essentially set the table for further FINRA guidance on RBI.

FINRA has created a webpage of RBI content for member firms.  Of note was FINRA's hinting at future rule changes:

As with other SEC rules, FINRA will examine for and enforce compliance with Reg BI and, in doing so, FINRA will adhere to SEC guidance and interpretations. FINRA staff expects to work with SEC staff to ensure consistency in examining broker-dealers and their associated persons for compliance with Reg BI. In addition, FINRA will review FINRA rules to see whether changes are needed to align FINRA rules with the SEC’s rulemaking. Any proposed changes to FINRA rules will be filed with the SEC for public comment and available on FINRA’s website.1  (Emphasis added)

I suspect changes will be coming to FINRA Suitability Rule 2111, which I wrote about here.

__________

Notes:

1.          FINRA SEC Regulation Best Interest website.  Available at: https://www.finra.org/industry/regulation-best-interest.  Accessed August 8, 2019.

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, Investment Suitability, Suitability Expert, Securities Exchange Commission, Regulation Best Interest, FINRA RN 19-26

IPO Churning - It Ain't What it Used to Be (And it Never Was)

Posted by Jack Duval

Jul 18, 2019 7:38:28 AM

I'm pleased to announce a new white paper entitled IPO Churning - It Ain't What it Used to Be (And it Never Was).

Over the years, I have participated in many IPO churning cases and have heard defense counsel argue that the client doesn't pay the commission and therefore there can be no churning.

This argument is just plain wrong.

Confusion about this issue arises from counsel not understanding the different types of IPOs commonly used today.  This white paper unpacks the different types of IPOs and shows how in almost all cases, the client pays the markup (commission) to the underwriters, not the issuing firms.

The paper also discusses:

  • How IPO churning has changed since the technology bubble and why clients are unlikely to make money in such a "strategy";
  • How prospectuses are used to solicit investors into IPOs;
  • The different types of prospectuses used;
  • Suitability, and;
  • Supervision.

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, IPO, Investment Suitability, FINRA Suitability Rule 2111, Suitability Expert, Churning, Section 2(a)(10), Section 15(c)(2)

SEC Regulation Best Interest - The Final Rule

Posted by Jack Duval

Jun 13, 2019 8:03:07 AM

Accelerant SEC Regulation Best Interest - Logo 

This blog post continues my series on SEC Regulation Best Interest ("RBI") and the DOL Rule.

After having disappeared for about a year, SEC Regulation Best Interest (“RBI”) is back, in finalized form.  The new rule will have an effective date 60 days after it appears in the Federal Register and a compliance date of June 30, 2020.[1]  The compliance date is when RBI goes live for all customers at all broker-dealers (“BDs”).

Like the '33 Act, the '34 Act, and both of the '40 Acts, as well as FINRA itself, the raison d'etre of RBI is to protect investors.  The SEC writes: [2]

We are adopting a new rule 15l-1 under the Exchange Act ("Regulation Best Interest") that will improve investor protection by: (1) enhancing the obligations that apply when a broker-dealer makes a recommendation to a retail customer and natural persons who are associated persons of a broker-dealer… and (2) reducing the potential harm to retail customers from conflicts of interest that may affect the recommendation.  (Emphasis added)

As a quick refresher, most of the language in the Proposed Release has been accepted, including that:

  • The RBI “standard of conduct draws from key principles underlying fiduciary obligations”;[3]
  • RBI is designed to “enhance the BD standard of conduct beyond existing suitability obligations”;[4]
  • RBI is still recommendation-based (like FINRA's Suitability Rule 2111). In particular, “regardless of whether a retail investor chooses a broker-dealer (“BD”) or an investment adviser (or both), the retail investor will be entitled to a recommendation (from a BD) or advice (from an investment adviser) that is in the best interest of the retail investor and that does not place the interest of the firm or the financial professional ahead of the interest of the retail investor”;[5]
  • The obligations of RBI exist at the time of the recommendation. (This is a key distinction from the continuous fiduciary obligations owed by investment advisors to their clients);[6]
  • The RBI standards cannot be satisfied through disclosure alone;[7]
  • To the chagrin of many, the final version of RBI still does not define “best interest” but does give significant discussion to the four elements that must be satisfied to meet the best interest standard.

There have been a number of significant modifications to the Proposed Rule.  I have summarized them below.[8]

Modifications of the Proposed Regulation Best Interest

Definition of a “Retail Customer”

A “retail customer” is now defined as:

any natural person who receives a recommendation from the BD for the natural person's own account (but not an account for a business that he or she works for), including individual plan participants… The plan representative will be a retail customer to the extent that the sole proprietor or self-employed individual receives recommendations directly from a BD primarily for personal, family or household purposes. [9]

Implicit Hold Recommendations

While BDs will not be required to monitor accounts, in instances where a BD agrees to provide the retail customer with specified account monitoring services, it is our view that such an agreement will result in buy, sell or hold recommendations subject to RBI, even when the recommendation to hold is implicit.[10]

Recommendations as to Account Types and Rollovers

RBI expressly applies to account recommendations including, among others, recommendations to roll over or transfer assets in a workplace retirement plan account to an IRA, recommendations to open a particular securities account (such as brokerage or advisory), and recommendations to take a plan distribution for the purpose of opening a securities account.[11]

Dually Registered Firms

RBI does not apply to advice provided by a BD that is dually registered as an investment adviser (dual-registrant") when acting in the capacity of an investment advisor.[12]

“Best Interest” Determination is Fact Specific

Whether a BD has acted in the retail customer's best interest in compliance with RBI will turn on an objective assessment of the facts and circumstances of how the specific components of RBI - including its Disclosure, Care, Conflict of Interest, and Compliance Obligations - are satisfied at the time that the recommendation is made (and not in hindsight).[13]

Definition of “Conflict of Interest”

RBI now defines a conflict of interest as, "an interest that might incline a BD - consciously or unconsciously - to make a recommendation that is not disinterested”.[14]

Disclosure of Material Facts

The final version of RBI revised the Disclosure Obligation to require disclosure of "material facts" regarding conflicts of interest associated with the recommendation.  This explicitly requires BDs to provide "full and fair" disclosure of material facts, rather than requiring BDs to "reasonably disclose" such information.

We are also clarifying that at a minimum, a BD needs to disclose whether or not account monitoring services will be provided (and if so, the scope and frequency of those services), account minimums, and any material limitations on the securities or investment strategies involving securities that may be recommended to the retail customer.

Also, we conclude that the basis for a BDs recommendations as a general matter (i.e., what might commonly be described as the firm's investment approach, philosophy, or strategy) and the risks associated with a BDs recommendations in standardized (as opposed to individualized) terms are material facts relating to the scope and terms of the relationship that should be disclosed.[15]  (Emphasis added)

The Care Obligation

The final version of RBI added explicit focus on the costs of a recommendation and reiterated that meeting the standard will be judged by how the BD established a reasonable basis to believe the recommendation was in the client’s best interest.

We are expressly requiring that a BD understand and consider the potential costs associated with its recommendation, and have a reasonable basis to believe that the recommendation does not place the financial or other interest of the broker-dealer ahead of the interest of the retail customer.  Nevertheless, we emphasize that while cost must be considered, it should never be the only consideration.  Cost is only one of many important factors to be considered regarding the recommendation and that the standard does not necessarily require the "lowest cost option".

... determining whether a BDs recommendation satisfied the Care Obligation will be an objective evaluation turning on the facts and circumstances of the particular recommendation and the particular retail customer.  We recognize that a facts and circumstances evaluation of a recommendation makes it difficult to draw bright lines around whether a particular recommendation will meet the Care Obligation.  Accordingly, we focus on how a BD could establish a reasonable basis to believe that a recommendation is in the best interest of its retail customer and does not place the BDs interest ahead of the retail customer's interest, and the circumstances under which a BD could not establish such a reasonable belief.[16]

We are clarifying that an evaluation of reasonably available alternatives does not require an evaluation of every possible alternative (including those offered outside the firm) nor require BDs to recommend one "best" product, and what this evaluation will require in certain contexts (such as a firm with open architecture).[17]

We further clarify that, when a BD materially limits its product offering ... it must still comply with the Care Obligation... and thus could not use its limited menu to justify recommending a product that does not satisfy the obligation to act in a retail customer's best interest.[18]  (Emphasis added)

Conflicts of Interest

Eliminate the distinction between financial incentives and all other conflicts of interest; and focus on mitigating conflicts of interest associated with recommendations that create an incentive for the associated person of the BD to place the interest of the firm or the associated person ahead of the interest of the retail customer.[19]

Elimination of Sales Contests

We are requiring BDs to establish written policies and procedures reasonably designed to identify and eliminate any sales contests, sales quotas, bonuses, and non-cash compensation that are based on the sale of specific securities or the sale of specific types of securities within a limited period of time.[20]

General Compliance Obligation

Establishing a new general "Compliance Obligation" to require BDs to establish policies and procedures to achieve compliance with RBI in its entirety.[21]

Federal Securities Laws, Scienter, and State Laws

Compliance with RBI will not alter a BDs obligations under the general antifraud provisions of the federal securities laws.  RBI applies in addition to any obligations under the Exchange Act, along with any rules the Commission may adopt thereunder, and any other applicable provisions of the federal securities laws and related rules and regulations.[22]

Scienter will not be required to establish a violation of RBI.

We note that the preemptive effect of RBI on any state law governing the relationship between regulated entities and their customers would be determined in future judicial proceedings based on the specific language and effect of that state law.[23]

No Waiver of Compliance or Protections

In addition, under Section 29(a) of the Exchange Act, a BD will not be able to waive compliance with RBI, nor can a retail customer agree to waive her protections under RBI. Furthermore, we do not believe RBI creates any new private right of action or right of rescission, nor do we intend such a result.[24]

“Federalizing” the Suitability Rule

FINRA CEO Jay Cook recently commented that FINRA is:

… thinking more generally about are there aspects of our rules that might need to be adjusted/aligned with where the SEC lands.  It’s not surprising because most of the sales practice requirements historically have come from the FINRA rulebook.  Reg BI is sort of federalizing sales practice issues… There’s a suitability element to Reg BI, and that’s when we’re talking about looking at alignment with our rulebook; if they (the SEC) have covered 100 percent of our suitability rule, then we might look at whether we need our suitability rule or do we need it in all circumstances?[25]

My guess is that FINRA Suitability Rule 2111 will be modified, possibly to focus on institutional investors.

In subsequent posts I will unpack the implications of the finalized RBI in more detail.

__________

Notes:

[1]      Regulation Best Interest: The Broker-Dealer Standard of Conduct; 17 CFR Part 240; Release No. 34-86031; File No. S7-07-18; 2 and 371. Available at https://www.sec.gov/rules/final/2019/34-86031.pdf; Accessed June 9, 2019.

[2]      Id. at 5.

[3]      Id. at 1.

[4]      Id.

[5]      Id. at 2.

[6]      Id. at 1.  As discussed below, this is true unless there is an explicit representation by a Registered Representative that positions will be monitored, which must be disclosed by the BD.

[7]      Id.

[8]      There were also a number of less significant modifications which I have left out of this summary.

[9]      Id. at 33 and Footnote 62.  A “retail customer” also includes a nonprofessional trustee who represents the assets of a natural person.

[10]    Id. at 34.

[11]    Id.

[12]    Id. at 35.

[13]    Id.

[14]    Id.

[15]    Id. at 37.

[16]    Id. at 38.

[17]    Id. at 39.

[18]    Id.

[19]    Id. at 40.

[20]    Id. at 41.

[21]    Id. at 42.

[22]    Id. at 43.

[23]    Id.

[24]    Id. at 44.

[25]    Melanie Waddell; ThinkAdvisor; “FINRA’s Cook: SEC Reg BI Compliance to Be a Heavy Lift”; May 8, 2019.  Available at: https://www.thinkadvisor.com/2019/05/08/finras-cook-two-issues-top-of-mind-regarding-sec-reg-bi-compliance/; Accessed July 12, 2019.

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, Investment Suitability, FINRA Suitability Rule 2111, Suitability Expert, Securities Exchange Commission, Regulation Best Interest

Jack Duval Quoted in AdvisorHub Article on Protecting Senior Investors

Posted by Jack Duval

Jan 10, 2019 7:22:42 AM

 

Accelerant Managing Partner Jack Duval was quoted yesterday in an AdvisorHub article on abuses of senior investors.

The article discusses the hiring of Jacqueline Rahn, the wife of Trevor Rahn, a J.P. Morgan broker who was fired for abusing elderly investors.

The original Accelerant blog post about Trevor Rahn can be found here.

__________

 

For information about securities expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: fraud, Senior Investors, supervision, Protecting Senior Investors, Elder Abuse, dementia, Alzheimer's, financial exploitation

SEC Regulation Best Interest - State Fiduciary Laws

Posted by Jack Duval

Oct 26, 2018 7:52:58 AM

Accelerant SEC Regulation Best Interest - Logo 

This blog post continues my series on SEC Regulation Best Interest ("RBI") and the DOL Rule.

There has been some hand-wringing over the past year about the potential of a fractured fiduciary duty landscape for Broker-Dealers ("BDs") and their Registered Representatives.  The concern is that individual states will impose a fiduciary standard on Registered Representatives while the FINRA suitability standard, and ultimately SEC Regulation Best Interest ("RBI"), cover the rest.

Allow me to allay these concerns:  the fractured fiduciary landscape already exists, and has for decades.

Nevada's Fiduciary Statues

The event that started the concern was Nevada passing legislation that imposed a fiduciary duty on anyone giving financial advice.  In short, the Nevada law:  "imposes a statutory fiduciary duty as set for in Chapter 628A of the Nevada Revised Statutes on Broker-Dealers and Investment Advisers."[1]

However, four other states have common law fiduciary duties for registered representatives and 31 additional states have quasi-fiduciary duties required under common law.[2]  I'm defining "quasi-fiduciary" obligations as Finke and Langdon do: those that exceed the FINRA suitability rules but do not expressly classify BDs as fiduciaries.[3]

Table 1: Fiduciary Status of Registered Representatives by State[4]

 Accelerant LLC Jack Duval - table of fiduciary status of registered representatives by state

Thus, 36 states already have some form of fiduciary duty required of registered representatives.

Voluntary Fiduciary Status for Broker-Dealers?

The existing uneven fiduciary duty landscape has not hampered BDs business efforts and I wouldn't expect it to in the future.[5]  Furthermore, if BDs were to find complying with the varying standards too taxing, they could just implement a fiduciary standard nation-wide.

Given SIFMA’s[6] long-standing resistance to a fiduciary standard, voluntary adherence to one is highly unlikely.   However, this might be more economical in the long-run, especially if more states pass their own fiduciary statutes.

As I have discussed in this blog posts series, I believe the pseudo-fiduciary standard under RBI will be difficult and expensive to implement.  BDs and their clients would be better off under a fiduciary standard.  Further, from a purely business perspective, adopting a fiduciary standard would help BDs compete with registered investment advisory firms which have been winning the battle for clients and assets.

Given the disappointment in many states with the defeat of the DOL Fiduciary Rule and RBI, it would not be surprising to see more states adopt fiduciary statutes.  Fiduciary expert James Watkins opines that “So long as states enact fiduciary laws that don’t impact a pension plan like a 401(k), they have every right to act,”.[7]

__________

Notes:

 

[1]       Nevada Secretary of State; Website; Available at: https://www.nvsos.gov/sos/licensing/securities/new-fiduciary-duty; Accessed October 25, 2018.

[2]       Michael Finke and Thomas Langdon; The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice; March 9, 2012; Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2019090; Accessed October 26, 2018; 13.

[3]       Id. at 14.

[4]       Id.

[5]       See supra Note 2.

[6]       Securities Industry and Financial Markets Association; https://www.sifma.org/about/.

[7]       Mark Miller; U.S. states eye protections for investors if federal regulation falters; Reuters; April 12, 2018; Available at: https://www.reuters.com/article/us-column-miller-fiduciary/u-s-states-eye-protections-for-investors-if-federal-regulation-falters-idUSKBN1HJ1NT?feedType=RSS&feedName=PersonalFinance; Accessed October 25, 2018.

 

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, Investment Suitability, FINRA Suitability Rule 2111, Suitability Expert, Securities Exchange Commission, Regulation Best Interest

SEC Regulation Best Interest - Lost Gains Cases

Posted by Jack Duval

Oct 4, 2018 9:12:46 AM

Accelerant SEC Regulation Best Interest - Logo 

This blog post continues my series on SEC Regulation Best Interest ("RBI") and the DOL Rule.

A "lost gains" case is one in which the claimant is asking for gains they believe they should have earned but did not.  These cases are different from the traditional securities litigation, where the claimant is asking for actual losses that have been incurred. 

Because the damage theory involves foregone gains instead of out-of-pocket losses, lost gains cases are generally considered to have a higher degree of difficulty.

On the face of it, this is common sense.  If an investor puts $10 million into an account and it declines to $5 million.  Most arbitrators can understand how the client has been damaged.  However, if the same investor puts $10 million into an account and six years later it's still worth $10 million, this is likely to generate less sympathy.

However, in my experience, lost gains cases can represent some of the most abusive fact patterns.

In the lost gains cases I have been involved with, the client’s accounts were essentially treated as an ATM for the Registered Representative.  These fact patterns involved extremely high fees charged for products that were churned into and out of the accounts at issue (as well as account-level fees).  The results were that the Registered Representative appropriated the growth of the accounts.

What growth wasn't appropriated was lost to the short-term holding of the investments.  That is, the investments were never invested as intended and allowed the time needed to generate returns.

In these cases, the clients were invested during strong bull markets but did not participate because of the abusive nature of the trading in their accounts.  

Six years later, they had experienced no growth while their Registered Representatives had made millions (literally).  In a bear market, such a pattern would exacerbate the decline in the accounts due to market forces and be discovered much sooner.  Bull markets hide these kinds of abuses, and the current historic bull market will surely be no exception.

However, what is different this time is the SEC’s pending Regulation Best Interest (“RBI”), which could be made law before the market declines.

Lost Gains Cases Under Regulation Best Interest

Under SEC Regulation Best Interest, lost gains cases should be easy.

This is because the burden of proof will be on the respondents to show their strategy was in the client's best interest and, as I've discussed in my RBI blog post series, they will need to produce contemporaneous evidence of their analyses showing how they came to that conclusion.[1]

In the fact pattern discussed above, this will be impossible.  Furthermore, a key defense will be removed.

Long-Term Time Horizons and the Risks of “Time Diversification”

In many securities litigations, a client's long-term time horizon is used as a defense to justify aggressive investments.  The logic is that the longer an investment is held, the less likely it is to generate a loss.  This is known as “time diversification”.  The problem with time diversification is that it is, at best, only partially correct, at worst it is a setup for disastrous portfolio decisions.[2]

The paradox of time diversification is that in order to benefit from higher returns (in equities usually) the client must increase their risk of interim declines in order to reduce their risk of a terminal loss.[3]

If RBI becomes law, the long-term time horizon will take on a different implication. 

Time Horizon, Fees, and Taxes under Regulation Best Interest

It has always been true that the longer a client's time horizon, the more important minimizing fees and avoiding taxes become.  This is not a matter of debate.  This is not something that reasonable minds can differ upon.  This is a 100 percent mathematical certainty.

Under RBI, this will become a key focal point.

If a client with a long-term time horizon is put into high fee products, charged high account-level fees, and/or churned into and out of commission product on a short-term basis, there is no way to argue it is in their best interest.

For instance, if fees can be reduced by one full percentage point per year, in 30 years time, the difference in terminal values will be about 30 percent.[4] 

For taxable accounts, the difference can be even more stark.  Annual after-tax returns of mutual funds often fall between one and two full percentage points compared to their pre-tax returns (the ones that are advertised).[5]

When combined, high expenses and tax-inefficient investing destroy investor returns.  In such a scenario, the broker, investment manager, and government all get paid before the investor, who is taking all the risk.[6]

Furthermore, the deleterious effects of high fees and taxes are completely return agnostic.  The return-destroying math holds true through all markets, good, bad, or sideways and compounds over time, to the investors disadvantage.

Costs Under Regulation Best Interest

As I have written about here, the SEC has recognized the importance of costs under RBI.[7]

While cost is not the only factor when evaluating an investment or investment strategy, it is one of the most important, if not the most important.  The customers tax status is also critical, which is why it is part of the profiling required under FINRA Rule 2111 and under RBI.[8]

RBI requires the Registered Representative undertake a fact specific analysis before the recommendation is made.  As mentioned above, this analysis will need to show why the recommended investment or strategy is in the best interest of the client compared to other investments offered by the firm.[9]

Any firm that can effectuate stock transactions for a client can purchase index ETFs for the same client (and most will have selling agreements with index mutual fund providers).  Thus, virtually every Broker-Dealer will be required to show why their investment or strategy  recommendation is better over the long-term than an index ETF or mutual fund on a net after-fee, after-tax basis (for their long-term investors).

This will present a significant hurdle for BDs because almost all equity investors are categorized as long-term investors, which is as it should be.[10]

Thus, all client accounts with a long-term time horizon will require an analysis that justifies the fees charged and taxes generated compared to low-fee, low-tax alternatives such as index ETFs and mutual funds.  In my opinion, this analysis will have to be rigorous, mathematical in nature, and be based on conservative assumptions.

Supervision to Avoid Lost Gains Cases

Supervisors will need to insure their Registered Representatives have undertaken a fact specific analysis for all their clients.  For those clients with a long-term time horizon, supervisors will need to insure the analyses comport to industry standards, reflect the client’s best interest given their particular facts and circumstances, and that the findings are reflected in the client’s portfolio.

__________

Notes:

[1]      Regulation Best Interest; Jack Duval; Available at: http://blog.accelerant.biz/blog/topic/regulation-best-interest; Accessed October 4, 2018.

[2]      “The Myth of Time Diversification: Analysis, Application, and Incorrect New Account Forms”; Jack Duval; PIABA Bar Journal; Spring 2006; Available at: http://blog.accelerant.biz/myth-of-time-diversification-whitepaper-0; Accessed October 4, 2018.

[3]       Statistically, the risk of interim declines is known as “first passage time probability”.

[4]       Reducing Attorney Fees (Investment Fees, that is); Jack Duval; Available at: https://blog.bant.am/index.php/2018/04/03/reducing-attorney-fees-investment-fees/; Accessed October 4, 2018.

[5]       Taxes – Another Killer of Attorney Returns; Jack Duval; Available at: https://blog.bant.am/index.php/2018/06/04/taxes-another-killer-of-attorney-returns/; Accessed October 4, 2018.

[6]        Wealth Confiscation by Your Three Investment “Partners”; Jack Duval; Available at: https://blog.bant.am/index.php/2018/09/07/wealth-confiscation-by-your-three-investment-partners/; Accessed October 4, 2018.

[7]         SEC Regulation Best Interest – Reasonable Care; Jack Duval; Available at: http://blog.accelerant.biz/blog/sec-regulation-best-interest-reasonable-care; Accessed October 4, 2018.

[8]         Under RBI, the Retail Customer Investment Profile includes “tax status”; SEC Regulation Best Interest; Release No. 34-83062; File No. S7-07-18; 406.  Available at: https://www.sec.gov/rules/proposed/2018/34-83062.pdf; Accessed October 4, 2018.

[9]          A separate issue is investments not offered by the firm.  This will likely come up for advisors who only sell one type of product such as insurance.  This is a key difference between RBI and the fiduciary duty imposed upon Registered Investment Advisors.  An Investment Advisor's duties are not limited to the products their firm sells.  This is a non-trivial difference and a significant shortfall in RBI.

[10]        Short-term investors should not be invested in equities.  The received view is that only funds which can be held for five years or more should be invested in equities, although some authors suggest avoiding equities unless having a 12-year time horizon.

 

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: supervision, FINRA Rule 2111 (Suitability), Investment Suitability, Suitability Expert, Securities Exchange Commission, Regulation Best Interest, Fact Specific Analysis, Lost Gains Cases

SEC Regulation Best Interest - Reasonable Care

Posted by Jack Duval

Sep 14, 2018 8:12:46 AM

Accelerant SEC Regulation Best Interest - Logo 

This blog post continues my series on SEC Regulation Best Interest ("RBI") and the DOL Rule.

Knowing the Client and the Investment

As I’ve written previously, a Registered Representative must know both the client and the investment in order to make a Best Interest recommendation under the proposed SEC rules.  (This is also true under the existing FINRA Suitability Rule 2111.)

Under RBI, the SEC addresses this directly, writing: [1]

... we believe acting in the best interest of the retail customer would require a broker-dealer to have a reasonable basis to believe that a specific recommendation is in the best interest of the particular retail customer based on its understanding of the investment or investment strategy under proposed paragraph (a)(2)(ii)(A), and in light of the retail customer's investment objectives, financial situation, and needs.  (Emphasis added)

Additionally, the SEC believes the principals that underlie the RBI requirements are the same as those under the DOL’s Best Interest Standard (which was a fiduciary standard):

We believe that the principles underlying our proposed best interest obligation as discussed above, and the specific Disclosure, Care, and Conflict of Interest Obligations described in more detail below, generally draw from underlying principles similar to the principles underlying the DOL's best interest standard, as described by the DOL in the BIC Exemption.[2]  (Emphasis added)

Although RBI does not impose a fiduciary duty, the SEC refers to the DOL Rule (as well as obligations under RBI) regarding how Registered Representatives will be held to a prudent expert standard:

(The DOL Rule) defines advice to be in the "best interest" if the person providing the advice acts "with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with the such (sic) matter would use... without regard to the financial or other interests" of the person.[3]

Further, the proposed Disclosure Obligation, Care Obligation and Conflict of Interest Obligations described in more detail below, establish standards of professional conduct that, among other things, would require the broker-dealer to employ reasonable care when making a recommendation.[4]  (Emphasis added)

Reasonable Care

An important question, then, is what constitutes “reasonable care”?  (I am here only focusing on the reasonable care obligation concerning investments, not those regarding the obligation to know the client.)

At a minimum, reasonable care requires the Registered Representative to undertake an analysis of the potential recommended investments to express her investment thesis and choose one that is in the best interest of the client.

In short, reasonable care requires that the Registered Representative do her homework.  Additionally, the diligence undertaken will need to be evidenced in writing so that it can be supervised, and for the broker’s own protection, should litigation ensue.

Choosing Between Investments

The SEC has provided guidance on the analysis of investments in RBI, writing: [5]

We reiterate that we recognize that it may be consistent with a retail customer's investment objectives - and in many cases, in a retail customer's best interest - for a retail customer to allocate investments across a variety of investment products, or to invest in riskier or more costly products, such as some actively managed mutual funds, variable annuities, and structured products.

However, in recommending such products, a broker-dealer must satisfy its obligations under proposed Regulation Best Interest.  Such recommendations would continue to be evaluated under a fact specific analysis based on the security or investment strategy recommended in connection with the retail customer's investment profile, consistent with the proposed best interest obligation.  (Emphasis added)

Fact Specific Analysis

The “fact specific analysis” is a new requirement and, as mentioned above, will need to be evidenced for each recommendation and supervised by the broker-dealer (“BD”).

The SEC mentions variable annuities as an example of a “more costly product”.  A fact specific analysis would need to show that a variable annuity was in the client’s best interest after accounting for those costs and compared to other available options.  For most variable annuities, this will be exceedingly difficult.

In a typical variable annuity contract the client is charged two to four percent per year in total fees.  These consist of asset management fees, mortality and expense fees, administrative fees, and riders.  Academic literature has shown a typical death benefit guaranteeing the principal to be worth between one and 10 basis points per year.[6]  However, most variable annuity contracts charge 100 to 125 basis points for the guarantee.

Such a high markup is very difficult to justify (as are all the other fees).

The advantage of tax-deferred growth inside a variable annuity is overwhelmed by these extremely high fees and the net investment returns will likely never overcome them when compared to a similar allocation into index funds, which typically distribute no capital gains.

Furthermore, most variable annuities require the sacrifice of liquidity, a risk that is completely uncompensated.[7]

In order to justify the recommendation of a variable annuity under RBI, a Registered Representative would have to show, in a fact specific analysis, how it is in her client’s best interest to buy the variable annuity versus a similar allocation in index funds.

I have yet to see such an analysis and am highly skeptical that one could pass the prudent expert standard.

The Importance of Costs

The SEC recognizes the importance of costs when undertaking a fact specific analysis, writing:[8]

… we emphasize that the costs and financial incentives associated with a recommendation would generally be one of many important factors...

Furthermore, the SEC states clearly that when choosing among identical securities, RBI requires the less expensive security be recommended:[9]

Thus, where, for example, a broker-dealer is choosing among identical securities available to the broker-dealer, it would be inconsistent with the Care Obligation to recommend the more expensive alternative for the customer…

If a broker-dealer recommends a more expensive security or strategy over another reasonably available alternative offered by the broker-dealer, they must have a reasonable basis to believe the higher cost is justified and that the recommendation is in the customer's best interest.

A key word in the quote above is “identical”.  Very few investments are likely to be identical in the literal sense.  However, many are certain to be highly comparable with differences that are essentially trivial.  For instance, in the variable annuity example, a large cap blend sub-account inside the variable annuity is likely to be highly comparable to an S&P 500 Index fund.

A simple correlation analysis would almost certainly reveal that the differences were small, as would an analysis of the holdings and the sub-accounts active share.  Indeed, most funds (or sub-accounts) in the same size and style category are likely to be close to identical, although none would likely meet the literal meaning of “identical”.

The more comparable two investments are, the more important it will be to choose the less expensive option.  For products that have insurance or other features such as principal protection, an additional analysis of the costs, liquidity, guarantor risk, and other factors will be required.

Importantly, the case of identical investments isn’t the only standard the SEC sets out, indeed, it is only a special case.

Comparable Product Factors

The SEC has provided guidance on what a BD must consider when undertaking their fact specific analysis for comparable products or strategies offered by the firm:[10]

While every inquiry will be specific to the broker-dealer and the investment or investment strategy, broker-dealers may wish to consider questions such as: 

  • Can less costly, complex, or risky products available at the broker-dealer achieve the objective of the product?
  • What assumptions underlie the product, and how sound are they? What market or performance factors determine the investor’s return?
  • What are the risks specific to retail customers? If the product was designed mainly to generate yield, does the yield justify the risk to principal?
  • What costs and fees for the retail customer are associated with this product? Why are they appropriate?  Are all of the costs and fees transparent?  How do they compare with comparable products offered by the firm?[11]
  • What financial incentives are associated with the product, and how will costs, fees and compensation relating to the product impact an investor’s return?
  • Does the product present any novel legal, tax, market, investment, or credit risks?
  • How liquid is the product? Is there a secondary market for the product?

As described above, the broker-dealer's diligence and understanding of the risks and rewards would generally involve consideration of factors, such as the costs; the investment objectives and characteristics associated with a product or strategy (including any special or unusual features, liquidity, risks and potential benefits, volatility and likely performance in a variety of market and economic conditions), as well as the financial and other benefits to the broker-dealer.

Fact Specific Analysis Supervision

Perhaps most important is that Registered Representatives will have to undertake their fact specific analysis before the recommendation is made.  As discussed above, that analysis would need to be in writing and show how the recommendation is in the client’s best interest and comports with all their particular facts and circumstances, including risk tolerance and investment objectives.

If there was no analysis, or the analysis was deficient, then the recommendation would likely fail to meet the RBI standard (or might only meet it by chance) and would certainly have failed to have been supervised.

The requirement of a fact specific analysis will necessitate additional supervisory systems and oversight, and BDs will need to implement policies and procedures to make sure they comply with RBI.

__________

Notes:

[1]           SEC Regulation Best Interest; Release No. 34-83062; File No. S7-07-18; Available at: https://www.sec.gov/rules/proposed/2018/34-83062.pdf; Accessed September 12, 2018.

at 141.

[2]           Id. at 58.

[3]           Id. at 108.

[4]           Id. at 59.

[5]           Id. at 147.

[6]           Mose Arye Milevsky and Steven E. Posner; The Titanic Option: Valuation of the Guaranteed Minimum Death Benefit in Variable Annuities and Mutual Funds; The Journal of Risk and Insurance, 2001; Vol. 68; No. 1, 93-128.  Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.178.1519&rep=rep1&type=pdf;  Accessed September 12, 2018.

[7]           Many variable annuities allow the withdrawal of up to 10 percent of the original investment on a penalty-free basis every year.  However, withdrawals above that amount often have eight to 10 percent penalties in the first year and decline each year after that.

            Typically, investors in illiquid investments such as hedge funds and private equity funds demand an illiquidity premium of three percent per year for the loss of liquidity.  Variable annuities provide no such return premium.  Indeed, because of their fee structure, they are likely to return three percent less than the benchmark each year.

[8]           RBI at 147.

[9]           Id. at 148.

[10]         Id. at 139-40 and 143.

[11]         An interesting question arises about firms that only offer one type of product, such as insurance carriers that only sell insurance or variable products.  I will address this in later posts.

 

To learn more about fiduciary expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: FINRA Rule 2111 (Suitability), Investment Suitability, Suitability Expert, fiduciary obligations, prudent expert standard, Securities Exchange Commission, Regulation Best Interest, Reasonable Care, Fact Specific Analysis

Protecting Senior Investors - Deconstructing a Supervisory Failure

Posted by Jack Duval

Aug 30, 2018 8:10:55 AM

 

This blog post continues a series I began in 2012 highlighting regulatory efforts to protect senior investors.  (My previous blog posts on protecting senior investors can be found here.)

On August 24th, The New York Times published an article relating the predatory abuse of senior investors by a broker engaging in unauthorized trading and churning of their account.[1]

Client Profile

The profile of the senior investors is typical in many abuse cases.  The father was 89 years old, had suffered two strokes and was residing in an assisted living facility.  The mother was 84 years old, had been diagnosed with Alzheimer’s, and was in the process of being moved to the same facility as her husband.

There was an younger adult daughter living in a community for adults with developmental disabilities and an older adult daughter who had been overseeing the parents accounts.

Fact Pattern

In 2017, Trevor Rahn, a broker at JP Morgan, began unauthorized trading in the account (which was worth about $1.3 million at the time) and in the first six months of the year  generated $128,000 in commissions.

It appears Mr. Rahn was selling positions that had been held for years and using the proceeds to purchase new-issue closed-end funds (“CEFs”).  The closed-end fund purchases were not mentioned in the article, but Mr. Rahn’s CRD lists CEFs as a product involved in the dispute.[2]

Furthermore, the commissions generated could not have been generated from stock trades alone, and were almost certainly from high-commission new issue CEFs.  The New York Times article mentions $47,600 in commissions in August 2017.  A look at the statement page in the article reveals there were $822,000 in sales proceeds and $796,300 in purchases.  At a 1.25 percent commission rate on the purchases and sales, there would have been $20,500 in commissions generated.  Less than half of the $47,600 reported.

However, if the sales of stock were made at a 1.25 percent commission rate and the proceeds invested in new-issue CEFs paying 4.5 percent commissions, the math works out very close:

  • $822,000 sold at 1.25% = 10,275;
  • $796,300 in purchases at 4.5% = 35,833;
  • This results in total commissions of $46,108 versus the $47,600 reported.

Supervisory Red Flags Missed

There were a host of missed supervisory red flags.  So many that it defies simple explanation.  What’s worse is that many of the red flags existed before the unauthorized churning trades took place.  The following is a list of supervisory red flags that should have been triggered under standard industry practice and systems:

Pre-Trade Red Flags

The following account traits should have resulting in the account being on heightened supervision and/or generated exception reports:

  • Two senior investors, aged 84 and 89;
  • Special needs adult child;
  • An unsophisticated daughter overseeing the account;
  • High cash flow needs for two parents and one child in assisted living communities;
  • Asset allocation of 93 percent equities (and possibly higher given the six percent in mutual funds could also have been in equities), and;
  • Lien on Trevor Rahn:[3]
    • Rahn had a $763,000 lean outstanding against him from Deutsche Bank Securities.
    • Under a forgivable loan, Mr. Rahn owed Deutsche Bank $748,011 when he resigned to go to JP Morgan. Upon signing with JP Morgan, Mr. Rahn received an upfront loan of $1,404,084 and $468,000 in restricted stock.
    • He chose not to use any of his upfront cash to pay back the loan from Deutsche Bank.

Client Statement:

Accelerant Protecting Senior Investors Jack Duval - Client Statement

Trading Red Flags

Even if the pre-trade red flags were missed, the trading in the account should have triggered multiple supervisory red flags immediately:

  • Sudden and uncharacteristicaly high turnover;
  • 344 unsolicited trades being entered in one account;
  • Multiple small odd-lot orders instead of block trades;
  • Large purchases of new-issue closed-end funds, and;
  • 10 percent cost/equity ratio (the costs were 10 percent of the account value).

Account-Related Red Flags 

Finally, if the pre-trade and trading red flags were missed, the following account-related red flags should have generated supervisory inquiry:

  • Sudden decline in account value (unrelated to market movements), and;
  • Realizing over $342,000 in long- and short-term gains on sales.

Supervision

Even casual supervision should have prevented the abuse described above.  The SEC and FINRA have made the protection of senior investors a regulatory priority since 2006.  (See my blog post with a timeline of regulatory actions to protect senior investors.)  Their focus has only intensified over the years and broker-dealers have been well informed of their obligations in this area.  (Access my Protecting Senior Investors white paper.)

Because of the high potential for abuse by brokers, family members, and fraudsters, all accounts of senior investors should be on heightened supervision.  Today’s supervisory systems can easily add age-based triggers for exception reports.  Indeed, because age is a hard number and not subject to debate (such as the suitability of certain investments) this should be a trivial red flag to implement.

There can be no excuse for failing to supervise the accounts of senior investors.

__________

Notes:

[1]      “Caring for Aging Parents, With an Eye on the Broker Handling Their Savings”; Tara Siegel Bernard; The New York Times; August 24, 2018; Available at: https://www.nytimes.com/2018/08/24/business/brokers-excessive-trading-retirement.html?login=email&auth=login-email; Accessed August 27, 2018.

[2]      CRD of Trevor Rahn; Available at: https://files.brokercheck.finra.org/individual/individual_2196155.pdf; Accessed August 27, 2018.

[3]      Deutsche Bank Securities Inc., v. Trevor Rahn; Case No. CV13-5534 RGK (VBKx).  Mr. Rahn attempted to have the arbitration decision to award Deutsche Bank the $748,011 vacated.  His claim was denied.

 

For information about securities expert Jack Duval, click here.

SIGN UP FOR OUR BLOG

Read More

Topics: fraud, Senior Investors, supervision, Protecting Senior Investors, Elder Abuse, dementia, Alzheimer's, financial exploitation

Subscribe to Email Updates

Recent Posts

Posts by Topic

see all