Securities Lawyer Blog

The Financial Industry Regulatory Authority (FINRA) has recently issued an Investor Alert and has also announced some noteworthy public education efforts. In the new Investor Alert, the agency focuses on account statements and trade confirmations. The alert entitled, It Pays to Understand Your Brokerage Account Statements and Trade Confirmations, is targeted at the general public to help investors manage their accounts more proactively. The goal is to ensure that investors are aware of what is in their investment accounts, but it is also intended to sensitize the investing public to potential "errors or broker or firm misconduct."

The hope is that investors will understand and review their statements for such things as trades and fees, and will contact their broker if there is something they do not understand or do not believe they authorized. The Investor Alert also informs investors about reviewing their statements to ensure their investment goals and strategy are being carried out.

In other efforts to educate the public, the FINRA Investor Education Foundation's Military Spouse Fellowship Program has just announced its 2012 military spouse application process. The Securities Lawyer Blog has posted on this program in past years.

Military spouses have the opportunity to receive education and training on financial matters and to become an Accredited Financial Counselor. Many families benefit from this program, not only the spouses that receive the training, but those families that ultimately are counseled by other military member spouses that are trained in financial matters.

According to FINRA, "[s]pouse fellows have logged more than 306,000 hours helping military families reach their financial goals, and 314 spouse fellows have graduated from the program." The outreach includes such important areas as tax and credit counseling.

Finally, FINRA's Investor Education Foundation and United Way Worldwide (UWW) have recently announced the 12 grant recipients taking part in the Financial Education in Your Community effort, which is administered by the United Way Worldwide and the FINRA Investor Education Foundation. Over $1 million in funds has been disseminated to various grantees around the country.

Through this program, low- and middle-income families receive information on financial matters. This year's program includes agencies across the country from New York to Louisiana to Ohio and out to Seattle. Each grantee has a specific mission, but all are intended to educate youth and adults in various aspects of financial well being. A full list of grantees can be found by clicking here.

The New York City securities law firm Gusrae Kaplan Nusbaum PLLC, dedicates its practice to securities and commodities litigation, regulatory and enforcement representation, broker-dealer advisory services and related representation. Please feel free to contact our offices at any time to speak with one of our experienced lawyers.

Last week, the FINRA Investor Education Foundation announced that it has expanded its efforts on behalf of our military service members. Together with the First Lady's and Dr. Jill Biden's Joining Forces initiative and the Foundation's Military Financial Education Project, 50,000 of our service members and their spouses will be entitled to complimentary FICO® Scores, which doubles the members currently able to receive a free credit score.

Using this important credit tool, families will also benefit from expanded financial information through the Foundation. A number of educational videos are being produced and will be available to members of the National Guard and their families. The first such video has just been released and will be made available to members. This particular video provides information about avoiding fraudulent investment schemes. This material will help members not only manage finances, but also stay away from fraudulent investments that might otherwise require more research time than members can afford. Military spouses will also receive training as financial counselors.

The Military Financial Education Project was launched five years ago to help military families deal with the challenges they have in managing their finances while they are on active duty and deployments. The resources provided by the Foundation and its projects are intended to help these families manage their finances without the additional expense of paying for private investment counseling.

This project allows service members to use myriad resources on line through the website, www.SaveAndInvest.org as well as to educate them on finances and savings. The stress these families are under given the nature of the work they do makes household management more and more challenging. The resources provided by FINRA are an important way of supporting our military families. As noted by the President of the FINRA Investor Education Foundation, Gerri Walsh " '[w]e believe providing the right tools for military families can enhance their financial readiness and relieve some of the stress families feel when it comes to managing household finances.' "

The programs for military families include not only the additional free FICO® Scores, which are available through service members' military financial educators, but many other efforts as well. Another important endeavor is the training of military spouses to become Accredited Financial Counselors. This program is in partnership with the Association for Financial Counseling and Planning Education® (AFCPE®) and the National Military Family Association. This year, there were 200 military spouses who received fellowships to become accredited and commit to two years of counseling military families with financial issues.

The New York City securities law firm Gusrae Kaplan Nusbaum PLLC, dedicates its practice to and specializes in securities and commodities litigation, regulatory and enforcement representation, broker-dealer advisory services and related representation. Please feel free to contact our offices at any time to speak with one of our experienced lawyers.

Recent events have made the public more aware of the potential for losses in investment portfolios. Extreme cases, such as those involving Ponzi schemes, have been well publicized. All investors can be vulnerable to unsound investing, but the aging and elderly are particularly vulnerable and, for that reason, can also be a target of fraud.

The FINRA Investor Education Foundation is now joining up with the Stanford University Center on Longevity to create the Research Center on the Prevention of Financial Fraud. The Research Center will bring together many experts and disciplines, such as those studying fraud, law enforcement and others to deal with this problem.

The good news is that although it is easier for those who are involved in fraud to reach out to vulnerable and uninformed investors, there are more refined ways to detect this activity. As noted in the joint press release issued late last week, fraudulent practices such as Ponzi schemes, online phishing scams and other scams are more widespread given the technologies available to those wanting to cause harm. But the new effort intends to "support and consolidate scientific research and connect this research to practical prevention and detection efforts."

While recognizing that investors of all ages can be at risk for fraud, the reality is that with an aging population, this activity may well increase. Dr. Laura Carstensen, Stanford Professor in Public Policy, Professor of Psychology, and Founding Director of the Stanford Center on Longevity noted that " '[w]ith the Center on Longevity's dedication to preserving financial security throughout our extended life spans, and with the support of the FINRA Foundation's ongoing commitment to protecting individuals from fraud, the new Research Center on the Prevention of Financial Fraud seeks to enhance the financial security of Americans.' " According to Dr. Carstensen, the intention is to "deliver practical, cutting-edge research to policymakers and law enforcement."

The Research Center has lined up an advisory council with expertise across many disciplines, including business, economics and psychology as well as representatives from AARP, the FINRA Foundation and the SEC. The Research Center's first conference will take place in November of this year in Washington D.C. and is entitled: The State and Future of Financial Fraud. Many disciplines are expected to join together at this conference to advance the efforts that will be at the core of the Research Center's work.

The Wall Street law firm of Gusrae Kaplan Nusbaum PLLC was founded over three decades ago by a Chief Attorney of the SEC's New York Enforcement Division. Our firm members include a former General Counsel of the New York Mercantile Exchange, a former General Counsel of an NASD member broker/dealer and a former in-house attorney of an NYSE member broker/dealer, in addition to arbitrators certified by the National Association of Securities Dealers, National Futures Association and the American Arbitration Association.

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