I've passed my Series 65 exam within the past two years, so if I wanted to I could register as an investment adviser. I have no criminal or disciplinary activity in my past, so I would definitely be granted a license by the State of Illinois Securities Department to start telling people what to do with their money or managing their brokerage accounts in exchange for a percentage of assets. But, unfortunately, my record-keeping skills are atrocious. I'm always getting notices from the IL Dept. of Revenue about late filings, penalties, and interest. I'll print my monthly account statement for the Roth IRA but inexplicably forget to print statements for the SIMPLE IRA. So, I stink at keeping records, and record keeping is a big deal for both advisers and broker-dealers. On Friday mornings, I usually go to the FINRA website and see what kind of rule violations are going on in the industry. For the firms, it's usually a lack of good record-keeping that gets them in trouble. They fail to report trades to TRACE (corporate bonds), or they submit reports that are inaccurate. Every little thing has to be perfect, as AXA Advisors discovered recently, according to this disciplinary action summary I'm reading right now. Apparently, on a few trades in municipal securities, the firm reported to the RTRS system that they had acted in a "principal" capacity, when, in reality, they had acted in an "agency" capacity. This, of course, also caused the firm to deliver customer trade confirmations that were inaccurate. Penalty? $20,000 fine.
Geeze. If you read the summary, you'll notice that AXA didn't bother to argue--they used AWC (acceptance, waiver, and consent) to settle the matter. On the other hand, I saw that in another case, the respondents appealed the NAC decision to the SEC, and are now appealing the SEC decision to the federal appellate courts.
However, we can only have so much fun with one blog post, and it's time for me to head to the office pretty soon, anyway.