In the News

FINRA Review, Investor Choice Act Highlight Arbitration Anomalies

August 5, 2013
by Melanie Waddell, ThinkAdvisor

FINRA’s Feinberg says broker expungement under review; new bill prohibits use of mandatory pre-dispute agreements in contracts

Two recent initiatives are intended to work in investors’ favor when it comes to the controversial practice of arbitration agreements.

First, announced Thursday, the Financial Industry Regulatory Authority will review a controversial proposal in arbitration cases that allows brokers to expunge black marks from their record. Second, introduced Aug. 2, is the Investors Choice Act of 2013, a bill intended to ensure that investors have access to the judicial system by prohibiting use of mandatory pre-dispute securities arbitration agreements.

Linda Fienberg, president of FINRA’s dispute resolution unit, told a gathering of industry attorneys late Thursday at a New York event held by the Practising Law Institute that FINRA is “looking at the issues raised by investors concerning settlement negotiations when an expungement request is involved,” according to Reuters.

Stand-alone reps at LPL stand to see big fee hike

July 16, 2013
by Bruce Kelly, Investment News

One-adviser shops forced to pay more due to B-D’s changes in rules governing OSJ; ‘rock and a hard place’

Bowing to coming industry regulation, LPL Financial LLC is eliminating independent reps’ ability to act as their own supervisors and hitting those 2,200 one-person shops with a fee increase.

It’s the latest restructuring of compliance and oversight at LPL Financial, the largest independent-contractor broker-dealer with more than 13,000 registered representatives and registered investment advisers. The move — particularly a $4,800 fee increase in 2015 for reps who choose to be supervised by LPL’s home office — will likely rankle LPL advisers, who have seen fee increases over the past two years, industry observers said.

LPL Financial’s New Supervisory Rules Will Cost Reps

July 16, 2012
by John Sullivan, Investment Advisor Magazine

Recruiter Jon Henschen claims most firms cover supervisory cost, LPL does not

LPL Financial (LPLA) announced on Monday that it is no longer allowing standalone reps to be their own supervisors (but they can keep their Series 24 and 26 licenses). Independent broker-dealer recruiter Jon Henschen, citing a LPL Financial registered rep, said that going forward, they will need to do one of the following:

— Be under a multi-rep OSJ

— Be supervised through the home office, which will cost an additional $4,800 per year

— Be tied to one of their institutional affiliates (such as bank channel)

Whether or not Henschen’s assessment proves accurate is far from settled.