FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.
SEC denies man’s attempt to register as a RIA from jail (Investor News)
The Securities and Exchange Commission has rejected convicted felon David Scott Cacchione’s attempt to become a registered investment adviser while in jail. Cacchione was sentenced to 60 months in prison and three years of supervised release, in addition to being ordered to pay $US50 million in restitution, for helping orchestrate a $US100 million fraud in which he used client money to secure loans for friends and made unauthorised trades from clients’ accounts. The SEC said, “While Cacchione may prefer that his criminal conviction and permanent injunction has no consequence in these proceedings, his attempts to sweep under the rug his past conduct and unfavorable evidence only strengthen the need to bar him completely from the securities industry.”
A study released by the Boston Federal Reserve has concluded the Great Recession cost graduates between 2007 and 2010 financially. Northeastern University professor and author of the paper, Alicia Sasser Modestino, noted, “Employers were able to get that college-educated worker on the cheap.” How did businesses do this? By raising education and experience standards.
Retail investors steering clear of ETFs (Financial Advisor)
Retail investors are largely avoiding the $US2 trillion universe of exchange traded funds. A survey by BlackRock and Fidelity Investments showed just 32% of the individual investors surveyed have ETFs in their portfolios. Why are investors avoiding ETFs? A lack of understanding the product was the most common reason, making up 62% of the replies.
BNY Mellon agrees to pay $US714 million to settle Forex probe (Think Advisor)
Bank of New York Mellon has settled a Forex probe with the Securities and Exchange Commission and Department of Labour for $US714 million. According to the Department of Labour, BNY “engaged in a deliberate, prolonged effort to conceal its pricing methods,” giving clients the almost worst possible exchange rate after promising the best. The bank then gave itself the best rate and made money on the spread between the two.
Ameriprise advisor avoids $US250,000 Merrill Lynch clawback (Financial Planning)
The Financial Industry Regulatory Authority has ruled in favour of wrongfully terminated adviser Rene Espinoza. In 2010, Espinoza left Ameriprise for Merrill Lynch, and a client dispute arose over annuities which originated at Ameriprise before being surrendered and replaced by new annuities. He was let go from Merrill for “conduct relating to the surrender of annuities and the submission of annuity orders,” forcing him to make counterclaims of his own that he was wrongfully dismissed. FINRA’s panel ruling on the matter determined, “no reasonable basis existed to support [Merrill’s] determination that such conduct had constituted grounds to terminate the registered person for cause.” Espinoza has since returned to Ameriprise.
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