Insights

By Peggy E. Chait

We have all learned the concept of assigning blame since we were children. Who among us did not chant at the top of our voices in unison, “Who stole the cookie from the cookie jar? Who me? Yes you. Couldn’t be. Then who?” Pointing our finger and the act of CYA (cover your a…) go hand in hand in our litigious society and Regulators encourage us to assign responsibility in order to make their jobs more lucrative and easier. Yes, I know about whistleblowers and the need to protect them for the betterment of society, and I am in agreement about the dangers of retaliation given their whistleblowing revelations. No contest there. What I would like to exami...

By Peggy E. Chait and Howard Spindel

For those of you that are old enough to remember the slogan, “when EF Hutton talks, people listen”, and the powerful effect the ad had on the general public, we can now attest that when the Wall Street community gathers in unity and speaks out, the regulators eventually listen.

We at Integrated Solutions are proud to be a member of the community that has been speaking up for a soon to be effective change in FINRA’s rule 1210. See FINRA Regulatory Notice 21-41. As a leading provider of financial accounting and compliance services to the financial services industry, we have written comment letters to FINRA on several occasions (June 30, 2020...

By Peggy E. Chait

Piaget’s theory of “object permanence” recognized that a developmental milestone in an infant’s life is when they cognitively understand that an object still exists, even if the infant cannot see or perceive it. So too, exists the ability of a Broker/Dealer to function efficiently and effectively without anyone conducting an onsite Branch Office Inspection. It has never before been so well evidenced that the need for an onsite examination is a fossil of previous generations, and that the Covid-19 pandemic worked like a team of well-trained archeologists to uncover this. For FINRA requested information and documentation from remote locations, including...

By Peggy E. Chait

2020 is a year that most of us would like to forget for a myriad of reasons, the foremost being the COVID-19 pandemic. It has wreaked havoc on our nation, our citizens, livelihoods, and the faith we have in each other and our country. It has had far reaching implications in our Wall Street community. Many issues that affect the way we conduct our business have been addressed by the regulatory community. Here are a few that we had touched upon in our Comment Letter which was submitted to FINRA on February 16, 2021.

> Broker/Dealers can function effectively even when their employees are not physically located under one roof, in one state or perhaps one country. Connectivity ...

By Peggy E. Chait

In my younger days, like many women, I was somewhat attracted to the “bad boy.” He was somewhat aloof, ran a bit wild and didn’t conform to the rules. Yet, he was what I wanted. Perhaps when he grew up, he would turn into a law-abiding, conservative Wall Street gentleman, and by then I knew better.

I also remember as the Chief Compliance Officer and Chief Financial Officer of a NYSE Member Firm, back in the mid 1980’s, reviewing U4 forms and disciplinary histories. I have to confess that I was sometimes amused by what I saw disclosed. People that you would least suspect were anything other than upstanding citizens their entire lives, had their past dal...

We love regulation! We owe our success to the regulatory environment in the financial services industry. From a selfish standpoint, we can say that we enjoy regulations. Similar to the way doctors love the flu and dentists love cavities, we are happy that we have a raison d'être.

Now that I have been associated directly or indirectly with the financial services industry for over five decades, I have come to the realization that while I value regulation, I really hate some of the regulations. I don’t hate all regulation since I recognize that at least some regulation is necessary. On the other hand, I recognize that the current regulatory environment in the securities industry is s...

By Peggy E. Chait

40 years ago, when I started working in this illustrious industry, we call Wall Street, much of what was agreed upon was done with a handshake. A person’s word was his or her word, and “just and equitable principles of trade” as espoused in FINRA Rule 2010, were understood and confirmed through the extension of a hand. Trust existed between client and professional and the number of rules that existed to “guide” the behavior of the professional was limited. Trust existed between professionals as well. For some reason, written agreements between Broker-Dealers were concise, and made their point without pages and pages of representations and warran...

In 2013, the SEC adopted amendments to the net capital rule that eliminated references to credit ratings that had previously applied to non-exotic debt securities such as high grade corporate debt and commercial paper that have a ready market.

Broker-dealers were supposed to either use a 15% haircut for their portfolios of these items or to have procedures in place to determine whether they have minimal credit risk. We can’t blame the SEC for changing the rules as they had little choice but to comply with the law. The changes were dictated by the politicians in Congress that passed the Dodd-Frank Act. That Act was a reaction or an over-reaction to abuses in the credit ratings industry. ...