Blog Posts

Pay Disclosures May Await Brokers Switching Firms

April 22, 2013

Industry observers expect FINRA may soon begin requiring that highly-paid brokers who are lured from one financial services firm to a competitor must disclose any “enhanced compensation” that sweetened the employment offer. The Wall Street Journal reported on the expected move recently in an article titled “Brokers Face Pay Disclosures.”

FINRA closed comments in March on a proposed rule to require disclosure of conflicts of interest relating to recruitment compensation practices (Regulatory Notice 13-02).

At issue is what brokers must disclose when clients naturally follow them to a new firm on the basis of personal relationships, or when the broker attempts to encourage a client to move their account to the broker’s new place of employment.

The term “enhanced compensation” means compensation paid in connection with the transfer of securities employment to the recruiting firm, other than the compensation normally paid by the recruiting firm to its established registered persons. Enhanced compensation includes but is not limited to:

  • Signing bonuses
  • Upfront or back-end bonuses
  • Loans
  • Accelerated payouts
  • Transition assistance
  • Other similar payments

Investor protection is behind FINRA’s initiative. Many member firms offer significant financial incentives to recruit registered representatives to join their firms, according to FINRA, yet these compensation arrangements are not disclosed to customers when they are asked to transfer their accounts to a representative’s new firm.

Morgan Stanley, with 17,000 financial advisors, “fully supports the uniform disclosure of firms’ recruiting compensation arrangements as outlined in the Rule Proposal,” according to a firm comment letter submitted to FINRA. The University of Miami School of Law Investor Rights Clinic “supports the aims of transparency and disclosure … but would suggest certain modifications.” Click on the link to read all FINRA comment letters.

The proposed FINRA rules are intended to apply to financial services companies regulated by the Securities and Exchange Commission (SEC), Commodity Futures Trading Commission (CFTC), state securities authorities, and related firms.

Exemptions are provided for compensation under $50,000 or institutional customer accounts.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

FINRA Board Authorizes Arbitration Panel Changes

April 19, 2013

The FINRA Board of Governors authorized FINRA to file with the SEC proposed amendments to FINRA Rule 12403 to simplify the panel selection rules.

Rather than requiring the customer to elect a panel selection method, parties in all customer cases with three arbitrators would have the same selection method.

Under this method, all parties would see lists of 10 chair-qualified public arbitrators, 10 public arbitrators and 10 non-public arbitrators. The rules would permit four strikes on each of the public arbitrator lists. However, any party could select an all-public arbitration panel by striking all of the arbitrators on the non-public list.

Alternatively, if the parties leave on the non-public list one or more of the same non-public arbitrators, the parties could have a majority public panel—that is two public and one non-public arbitrator.

Other actions from the FINRA Board’s April 18th meeting include:

  • Beginning with the next FINRA Board meeting in July, designated Board members will host a webcast immediately following the meeting to share key points with investors.
  • The Board authorized FINRA to file with the SEC proposed amendments to the Discovery Guide used in customer arbitration proceedings to provide general guidance on e-discovery issues and product cases, and to clarify existing provisions relating to affirmations.

Fort Lauderdale Securities Litigation and Arbitration Attorney

Contact Fort Lauderdale securities litigation and arbitration attorney Howard N. Kahn, Esq. if you or someone you know has a securities or broker dispute. He is an experienced securities litigation and arbitration attorney, and is available to assist individual investors, brokers, and brokerage firms involved in securities matters. You can reach him at 954-321-0176 or online.

Checks Going Out to Mortgage Foreclosure Victims

April 10, 2013

A check for $1,000 may not do much to offset the financial distress associated with a mortgage foreclosure, but that is the most many victims can expect under a recent government program intended to provide compensation for mortgage errors. The payments will range from $300 to $125,000.

Military veterans who incorrectly had their home foreclosed on while they were on active duty will receive the highest payments.

Bank regulators initially planned a review of all qualifying mortgage files, but soon discovered that the number of actual mortgage errors exceeded expectations. The automatic portion of the review was then terminated early. Consumers were allowed to ask for a review of their foreclosure files, and about 439,000 did so. These borrowers are expected to be paid twice as much as those who didn’t seek a review.

Overall, payments of $3.6 billion payable to 4.2 million borrowers are scheduled to begin on April 12 following an agreement reached by the Office of the Comptroller of the Currency and the Federal Reserve Board with 13 mortgage servicers.

Qualifying mortgages must meet the following criteria:

  • Home that were in any stage of the foreclosure process in 2009 or 2010
  • Mortgages were serviced by one of the following companies, their affiliates, or subsidiaries: Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

Mortgage compensation checks will be sent in several waves beginning with 1.4 million checks on April 12.  The final wave is expected in mid-July 2013.  More than 90 percent of the total payments to borrowers at 11 of the 13 servicers are expected to have been sent by the end of April.  Information about payments to borrowers whose mortgages were serviced by Goldman Sachs and Morgan Stanley will be announced in the near future.

In most cases, borrowers will receive a letter with an enclosed check sent by the Paying Agent—Rust Consulting, Inc.  Some borrowers may receive letters from Rust requesting additional information needed to process their payments.  Previously, Rust sent postcards to the 4.2 million borrowers notifying them of their eligibility to receive payment under the agreement.

Rust is sending all payments and correspondence regarding the foreclosure agreement at the direction of the OCC and the Federal Reserve.

Borrowers can call Rust at 1-888-952-9105 to update their contact information or to verify that they are covered by the agreement.  Information provided to Rust will only be used for purposes related to the agreement.

Borrowers should beware of scams and anyone asking them to call a different number or to pay a fee to receive payment under the agreement.

Accepting a payment will not prevent borrowers from taking any action they may wish to pursue related to their foreclosure.  Servicers are not permitted to ask borrowers to sign a waiver of any legal claims they may have against their servicer in connection with accepting payment.

Fort Lauderdale Foreclosure Defense Attorney

Choosing the best approach to protecting yourself and your family from a mortgage foreclosure involves many legal considerations. Contact Fort Lauderdale mortgage foreclosure attorney Marcy Resnik to discuss how you can defend your legal rights in a foreclosure. You can contact Ms. Resnik online or call her at 954-321-0176.

Prenuptial Agreements: Put Everything in Writing

April 8, 2013

A New York State appellate court, in a surprise move, recently rejected a prenuptial agreement. While the family and divorce laws vary from state to state, prenuptial agreements tend to be respected and upheld in most court proceedings when they are properly prepared and executed.

A recent Wall Street Journal article on the topic titled “Shoring Up Your Prenup” contains important reminders when preparing a prenuptial agreement in advance of a wedding:

  • Put everything in writing
  • Give your fiancee plenty of notice
  • Don’t try to keep it all
  • Don’t leave anything out

A prenuptial agreement, entered into before the marriage date, gives each party the comfort of knowing that their wishes are legally binding.

Reaching agreement as to how assets, liabilities, and family obligations will be handled makes it easier for the parties to focus on achieving a mutually supportive marital relationship.

Situations that may cause a prenuptial agreement to be questioned include an execution date very close to the wedding date, or competing claims of verbal agreements not reflected in the legal document. Failure to include significant assets in a prenup also can potentially cause trouble, particularly when there is a disproportionate level of wealth between the two parties.

A family law attorney who is experienced in prenuptial agreements can help a couple avoid common pitfalls that may cause trouble later in the marriage if there is a dispute over asset allocation or care of children.

Click on the link to read our Fact Sheet, Prenuptial Agreements Protect a Second Marriage.

Contact a Florida Prenuptial Agreement Attorney

Every family is different. Fort Lauderdale divorce attorney Marcy Resnik understands the personal and sensitive needs of a person contemplating a second marriage. Contact her to discuss your case.

Margate Commissioner David McLean Suspended

April 5, 2013

Florida Governor Rick Scott suspended Margate Commissioner David McLean from public office, effective today.

McLean allegedly used his influence in exchange for payment to assist a business owner in applying for an occupational license, among other activities.  Cooperating Witnesses in the case included a commercial property owner of a Margate strip shopping center and a general construction contractor.

McLean appeared in court to plead not guilty on Wednesday, and surrendered to the FBI.

The Governor’s Executive Order of Suspension directs that David McLean is prohibited from performing any official act, duty, or function of public office; from receiving any pay or allowance; and from being entitled to any of the emoluments or privileges of public office during the period of suspension, which period shall be from today, until a further Executive Order is issued, or as otherwise provided by law.

Federal bribery charges brought against Mr. McLean are a result of isolated incidents involving one elected official, according to the City’s website. No employees of the City and no other elected officials are involved. No city, state, or federal funds were misappropriated.

McLean is one of five City Commissioners who are elected “at large” by Margate voters. The Commissioners also serve on the Margate Community Redevelopment Agency (“CRA”) Board. McLean was first elected in 2004, and then re-elected in 2008 and 2012. He was elected as Vice Mayor of Margate from March 16, 2011 and served in that capacity until November 21, 2012.

The Fort Lauderdale Law Firm of  Kahn & Resnik, P.L.

The Florida lawyers at Kahn & Resnik, P.L. are available to service your legal needs.

Our concierge approach to the practice of law reflects our philosophy of personalized and confidential attention. When you retain an attorney at Kahn & Resnik, P.L., we work efficiently and effectively to help you achieve your business and personal objectives.

We can assist you in legal matters relating to commercial litigation, divorce, disability law, real estate litigation, securities litigation, and corporate transactions.

We serve business owners, professionals and individual clients across Florida, including Miami, Fort Lauderdale, Boca Raton, West Palm Beach, Naples, Orlando, Tampa, Daytona Beach, Jacksonville, Tallahassee, and other cities throughout the state. Contact Howard N. Kahn, Esq. at 954-321-0176 or online.

 
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