Although the Financial Industry Regulatory Authority (FINRA) commonly disciplines members who violate SEC rules and is known to impose significant fines and other sanctions on them, the expulsion of a firm from FINRA membership altogether is a drastic step that is undertaken only in egregious cases. But in July, the authority expelled two members and barred their principals or representatives from further association with any FINRA firm after investigations disclosed that the parties had willfully engaged in fraudulent trading schemes and otherwise violated SEC rules. The actions sent a clear message to other potential wrong-doers that FINRA may no longer be satisfied with only financial penalties against its members where rule violations serve to defraud investors.
When you think of online dating sites, chances are words like Cupid or Lovestruck come to mind. But FINRA? SEC? Last month, both the Financial Industry Regulatory Authority and the Securities and Exchange Commission got involved when an online dating scheme turned out to be a scam which—quite romantically—defrauded several women and their families of millions of dollars for the criminal Casanova’s investment scheme. Now those agencies and the Federal Trade Commission (FTC) are joining forces to warn unsuspecting online lovers of the financial risks they may be exposing themselves to.
FINRA, the Financial Industry Regulatory Authority, was authorized by Congress to police broker-dealers and to bring disciplinary lawsuits against financial industry members that it believes have violated securities laws. But which securities laws is it authorized to enforce? And which actions exceed its legislative authority? Those are the questions currently pending before a Maryland court in the case of Scottsdale Capital Advisors Corp. et al. v. the Financial Industry Regulatory Authority, brought by an Arizona penny-stock broker.