SEC Approves FINRA Rule Permitting Mid-Case Referrals

By Patricia Uceda, Fall 2014 Graduate Research Assistant

LAW_IACThe SEC approved a rule change to Rule 12104 of the Code of Arbitration Procedure for Customer Disputes and Rule 13104 to the Code of Arbitration Procedure, both entitled “Effect of Arbitration on FINRA Regulatory Activities” broadening the authority of arbitrators to make referrals during an arbitration proceeding. The previous rules only permitted such referrals when a case concludes.

The approved rule change permits an arbitrator to make mid-case referrals if he or she becomes aware of any matter or conduct that the arbitrator has reason to believe poses a serious threat, whether ongoing or imminent, that is likely to harm investors unless immediate action is taken. If an arbitrator makes a mid-case referral, it must be disclosed to the parties and a party is permitted to request recusal of the referring arbitrator within three days of being notified of the referral. The new rule further provides that the arbitrator should wait until the case concludes to make a referral if he or she believes that investor protection would not be materially compromised by the delay.

FINRA filed an early version of the proposed rule change in July of 2010; however it made a few changes and published the current version for comment in the Federal Register on February 12, 2014. The SEC received twelve comment letters, including one from the GSU Investor Advocacy Clinic.  Our Clinic expressed concern Continue reading

Clinic Interns Provide Education on Preventing Investment Fraud

fall2014corbinOn Wednesday, October 15, 2014, Investor Advocacy Clinic student interns Ryan Corbin, Kori Eskridge, and Kristina Ludwig presented “Fraud Watch 2014: How to Spot and Prevent Investment Fraud” to a group of Georgia State University College of Law students. The event was co-sponsored by the College of Law’s Wealth Management and Estate Planning group. Corbin began by introducing the group and explaining the mission of the Investor Advocacy Clinic. He then explained that anyone with money is a target for investment fraud, driving home the relevance of the presentation. Continue reading

SR-FINRA-2014-026 Rule Change: FINRA Increases Arbitrator Honoraria

By Patricia Uceda, Fall 2014 Graduate Research Assistant

gavelThe SEC approved FINRA’s proposed rule change to amend FINRA’s Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes to increase certain fees for the overall purpose of increasing arbitrator honoraria. Continue reading

SEC Targets International Pyramid Scheme

By Patricia Uceda, Fall 2014 Graduate Research Assistant

pyramidThe SEC recently announced charges against the operators of an international pyramid scheme that raised more than $129 million from investors worldwide, primarily in the U.S., China, and Taiwan.   Continue reading

SEC Charges Four Insurance Agents in Securities Fraud Targeting Elderly Investors

By: Ryan Corbin , Fall 2014 Student Intern

investorOn September 26, 2014, the SEC charged four insurance agents with unlawfully selling securities as part of a multi-million dollar scheme targeting elderly investors. According to the SEC, “the scheme primarily targeted retired annuity holders by Continue reading

SEC Suspends Trading in Nine Penny Stocks in Ongoing Efforts to Combat Microcap Fraud

By Patricia Uceda, Fall 2014 Graduate Research Assistant

bullIn an ongoing effort to put a stop to microcap fraud, SEC recently suspended trading in the stock of nine penny stock companies. If you are unfamiliar with the term microcap fraud, it is the term Continue reading