The Securities and Exchange Commission’s Division of Examinations issued a risk alert Wednesday spotlighting myriad issues with advisory fee calculations and customer billings and warning that overcharging would continue to be an enforcement focus for the agency. The division issued the alert following examinations of roughly 130 registered investment advisors which uncovered them engaging in fee miscalculations, disclosure failures and lax compliance programs, policies, and procedures around billing. The examinations often lead to advisors returning money owed to clients, the alert said. “[T ..read more

The Issue I’ve often said that the best job in the world is to fail out of the Merrill Lynch training program. One emerges from the Merrill program with a securities license, and an understanding of the business and its sales processes, along with an unparalleled education in markets and products. A “failed” trainee need not feel self conscious as over 80% of her colleagues also failed out of the program over a few years. In fact, she became a valuable commodity as banks, RIAs, discounters, BDs, and regionals were happy to snatch up anyone so trained and still eager. “Merrill trains the street ..read more

Bloomberg – It’s the Grinch That Stole New Year’s. Thanks to whoever created an obscure piece of New York Stock Exchange red tape — officially known as Rule 7.2 — U.S. equity markets won’t commemorate the start of 2022 with a holiday. The rule stipulates that when a holiday falls on a Saturday, the market will close on the preceding Friday — unless, that is, “unusual business conditions exist, such as the ending of a monthly or yearly accounting period.” Since Dec. 31 marks the end of the month, quarter and year, that means a full session on New Year’s Eve and no day o ..read more

Charles Schwab Corp. locked horns with a group of investors who in September brought a class action claim alleging its robo-advisor, Schwab Intelligent Portfolios, over-allocated customers to cash, bolstering the retail brokerage’s income while costing investors hundreds of millions in potential gains. The plaintiffs had characterized the cash sweeps at issue as “undeclared” fees. The Westlake, Texas-based company asked the court to toss the case arguing Charles Schwab Investment Advisory, the subsidiary entity overseeing its robo-advisor, had “fully” disclosed how the program generates revenu ..read more

A New York state judge has ordered two brokers who joined J.P. Morgan Advisors last month to justify why the court shouldn’t grant their ex-employer Morgan Stanley’s request for a temporary restraining order to bar them from soliciting former clients. Morgan Stanley filed a petition seeking the TRO in mid-October, a week after New York-and-Miami brokers Joseph Donnelly and Sean Donnelly moved to J.P. Morgan. The wirehouse alleged the two brokers had been encouraging customers to move their business to their new firm in violation of their one-year non-solicitation agreements and teaming agreeme ..read more

Bloomberg – Endless demand to protect portfolios from rising prices is fueling an indiscriminate boom in one corner of the $7.2 trillion U.S. exchange-traded fund market. Every single ETF with the word “inflation” in either its name or description has posted inflows so far this year, according to data compiled by Bloomberg — a rare degree of one-way conviction among the investing masses. The 18 products — spanning asset classes and with strategies designed to outperform when prices rise — have so far lured $35.5 billion in new cash, the data show. That equates to 37% of their assets, maki ..read more

The Financial Industry Regulatory Authority imposed on New York-based Aegis Capital Corp., a total of roughly $1.7 million in customer restitution obligations, and a roughly $1.1 million fine based on allegations that it failed to supervise brokers who were engaged in potentially excessive and unsuitable trades, according to a settlement announced on Tuesday.  Finra’s probe, which was sparked by a customer arbitration complaint, found that “from July 2014 to December 2018, Aegis failed to implement a supervisory system reasonably designed to comply” with the regulator’s suitability requir ..read more

J.P. Morgan Advisors is forging ahead with its expansion plans and has named a new ‘regional director’ for its Los Angeles market on the heels of hiring a large team from RBC Wealth Management-U.S. as the market for talent heats up in the City of Angels.  Michael A. Rogers, a veteran private wealth manager, has taking over the Los Angeles director role overseeing two offices in Los Angeles and a third in Santa Barbara, according to two sources familiar with the move. The move is a return to the brokerage world for Rogers, whose move was announced internally on Monday, and who had been a W ..read more

Bloomberg – Robinhood Markets Inc. said personal information of about 7 million people — or roughly a third of its customers — was compromised in a data breach last week and that the culprit demanded payment. The intruder obtained email addresses of about 5 million people as well as full names for a separate group of about 2 million, Robinhood said Monday in a statement. For some customers, even more personal data was exposed, including names, birth dates and ZIP codes of about 310 people, and more extensive information belonging to a group of about 10. The Menlo Park, California-based br ..read more

Edward D. Jones & Co.’s effort to block a former broker who moved to Ameriprise Financial in Henderson, Nevada from transferring his customers to his new firm appears to have backfired, according to an arbitration award issued on Thursday.    A Financial Industry Regulatory Authority arbitration panel denied Jones’ breach of contract and trade secret claims and instead ordered it to pay $562,000–including $447,000 in damages and $115,000 in attorney fees–to Michael Peterson, who defected two years ago. The broker and his new firm had counter-claimed against Jones for unfair ..read more