The Securities Litigation Expert Blog

Accelerant Publishes New White Paper: "Suitability Obligations When Using Specialists"

Posted by Jack Duval

Oct 16, 2013 4:10:45 AM

The white paper can be found here.

From the introduction:

The specialist system has existed in the brokerage world since the 1980’s, however, it has not received a great deal of regulatory or expert commentary. This is remarkable since the use of specialists is common throughout the industry, particularly in the sales of complex products.

This paper explores the suitability obligations of Registered Representatives and product specialists when jointly making recommendations to clients. The origin and evolution of the specialist system is examined along with the functions typical of specialists. The industry distinction between “inside” and “outside” specialists is described, and selling agreements between Broker-Dealers (“BDs”) and outside specialists are examined as well.

Most importantly, a critical potential dilemma is explored in regards to suitability: what happens if the Registered Representative knows the client, the product specialist knows the product, but neither knows both?

The answer, in short, is that the Registered Representative has ultimate responsibility for the suitability of all recommendations to the client. However, if the Registered Representative involves a specialist in the recommendation at any time, then both must know the client and the investment well enough to make a suitability determination. If either fails in this regard, then the recommendation cannot be said to be suitable.


The paper is co-authored by John Duval, Sr. and Jack Duval.

 

 

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Topics: FINRA, registered representative, broker dealer, litigation, white paper, suitability, supervision, Accelerant, SEC, specialists, Jack Duval, John Duval Sr., Compliance, regulation.

Swap Exchanges Could Eat 30-50 Percent of Brokers Revenue

Posted by Jack Duval

Jan 4, 2013 2:40:02 AM

Reuters reports that new Dodd-Frank Act rules could drive 30-50 percent of swap trades to exchanges, leaving brokerages looking for ways to replace billions of revenue. (Reuters)

See our previous coverage of Dodd-Frank Act regulations on the swap markets here and here.

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Topics: Swaps, exchanges, broker dealer, Dodd-Frank Act, regulation.

The New York Observer Weighs in on the Fiduciary Battle Between RIAs and BDs

Posted by Jack Duval

Aug 22, 2012 8:50:22 AM

The Observer has always published interesting, if not quirky, financial reporting.  Here's a serious piece on the fiduciary standard battle currently raging across the financial industry.

A surprising number of heavy hitters are putting their two cents in - from many different walks of life.

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Topics: RIA, broker dealer, The New York Observer, Compliance, fiduciary standard

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