SEC Archives

FINRA will make more information about brokers and former brokers available to the public

On July 13, 2010, the Financial Industry Regulatory Authority (FINRA) announced that it will be implementing changes to its free online BrokerCheck service. With recent approval by the Securities & Exchange Commission, the amount of information available to the public about current and former securities brokers will expand significantly in the coming months, including the number of customer complaints reported publicly. The public disclosure period for the full record of a broker who leaves the industry will be extended from two years to 10 years, and certain information, such as criminal convictions and selected civil injunctive actions and arbitration awards, will be on record permanently. The changes will also formalize a process for current and former brokers to dispute or update the information disclosed through BrokerCheck.

“This additional information will benefit investors who are considering whether to conduct or continue to conduct business with a particular securities firm or broker,” said FINRA chairman and CEO Rick Ketchum. “Just as important, it will provide valuable information about persons who have left the securities industry, often not of their own accord, and who have established themselves in other segments of the financial services industry and can still cause great harm to the investing public.”

July 22nd, 2010|Educational Series|

Challenging the constitutionality of the Public Company Accounting Oversight Board (PCAOB)

The U.S. Supreme Court, on June 28, 2010, issued its decision in the constitutional lawsuit that challenged the PCAOB, affirming in part and reversing in part the judgment of the Court of Appeals in favor of the PCAOB. The case, Free Enterprise Fund vs. Public Company Accounting Oversight Board, was brought on behalf of a Nevada accounting firm, Beckstead & Watts, which challenged the constitutionality of the law after objecting to the PCAOB’s inspection findings. The Free Enterprise Fund, a group opposed to government regulation, has lost the case twice before, in district and appeals courts.

The PCAOB Web site (http://pcaobus.org/Pages/default.aspx) posted the following: “The Supreme Court held that the Sarbanes-Oxley Act’s provisions making PCAOB Board members removable by the Securities and Exchange Commission (SEC) only for good cause were inconsistent with the Constitution’s separation of powers. Because the Court severed these provisions from the Act, however, no legislation is necessary to bring the Board’s structure within constitutional requirements. The consequence of the Court’s decision is that PCAOB Board members will be removable by the SEC at will, rather than only for good cause. All other aspects of the SEC’s oversight, the structure of the PCAOB and its programs are otherwise unaffected by the Court’s decision. Accordingly, all PCAOB programs will continue to operate as usual, including registration, inspection, enforcement, and standard-setting activities.”

July 18th, 2010|Educational Series, Judgment|

More on fake Web sites

Bogus company Web sites mimicking government entities and promising easy money SECare sprouting in record numbers. In March, the SEC issued warnings to investors about a fraudulent Web site set up by a company named International SecurityInvestor Protection Corporation (ISIPC) which claimed that $1.3 billion in Madoff money has been found in Malaysia and urged Madoff victims to submit personal information to verify that they are on the restitution list. The site copied most of the content and design of the Securities Investor Protection Corporation Web site, and provided links to several legitimate government entities such as the United Nations, the International Monetary Fund, the World Bank and the IBA, falsely touting their sponsorship. (The SIPC is a non-profit organization created by Congress in 1970 toprotect customers in the event of a brokerage failure, acting as a trustee or working with independent court-appointed trustees to recover funds).

Two months after the ISIPC made its debut, the SEC posted an alert that a Web site for an entity calling itself the “US Securities and Equities Administration” was attempting to dupe investors by claiming that funds were being held by the U.S. government on their behalf, and asking for upfront fees to collect the funds.

One of the easiest ways to spot government-related online scams is to look at the Web site and e-mail addresses. No U.S. government agency has a Web site or e-mail address that ends in anything other than “.gov”, “.mil”, or “fed.us”.

July 15th, 2010|Educational Series|

Disciplinary actions filed by the Public Company Accounting Oversight Board (PCAOB)

The PCAOB Web site now maintains records of disciplinary and settlement orders of registered firms and/or their associated persons for violations of any provisions of the Sarbanes-Oxley Act, professional standards, rules of the PCAOB or the SEC, or U.S. securities laws relating to the preparation and issuance of audit reports. These records date back to 2005 and can be found at http://pcaobus.org/Enforcement/Decisions/Pages/default.aspx.

As required by the Sarbanes-Oxley Act, contested Board disciplinary proceedings are confidential and nonpublic, unless and until there is a final decision imposing sanctions. The PCAOB Web site also contains a section for orders granting petitions to terminate bars, at http://pcaobus.org/Enforcement/Petitions/Pages/default.aspx.

June 28th, 2010|Educational Series|