Page 13 - Investment Advisor - November 2021

a number of Commissioners have been provisions to the existing rules on dishon- • Attempting to avoid payment of
warning the public that these products, est or unethical business practices by BDs, any client or customer-initiated
often called ‘complex ETPs,’ can pose risks agents, advisors and advisor reps: arbitration; or
to individual investors,” Gensler said. • Failing to satisfy an arbitration • Failing to satisfy the terms of any
Gensler noted the SEC’s Office of award resulting from a client or order resulting from a regulatory
Investor Education and Advocacy alert customer-initiated arbitration, action taken against the registrant.
issued in 2009 of the risks that one type
of ETF can pose to investors who buy
and hold them for longer than one day.
“In 2015, the Commission sought
public comment on a broad range of
issues relating to ETPs, including listing
standards and broker-dealer sales prac-
tices,” he said.
In November 2020, Cetera Financial Empower actions that
Group, Summit Financial Networks and
Advisor Group, Royal Alliance Associates go beyond words.
and Securities America Advisors were
among firms the SEC charged with mak-
ing unsuitable sales of complex ETPs to
retail investors. All five firms settled the
claims for a combined total of $3 million
that will be returned to harmed investors,
according to separate SEC orders.

NASAA WANTS TO ENFORCE ARB
AWARDS WITH MODEL RULES
The North American Securities
Administrators Association released for
public comment Oct. 5 proposed model
rules regarding unpaid arbitration
awards and regulatory fines. If adopted
by NASAA members, the rules would
make it an unethical business practice
for a broker-dealer, agent, investment
advisor or investment advisor rep reg-
istered in a jurisdiction to fail to pay an
arbitration award or fine.
Melanie Senter Lubin, NASAA president At BNY Mellon, we celebrate actions that
and Maryland Securities Commissioner, lead to greater good. We congratulate the
said in a statement that the model rule ThinkAdvisor Luminaries awardees.
“would require financial professionals to
meet their regulatory obligations includ-
ing payment of arbitration awards and
Stefani Reynolds/Bloomberg who fail to fulfill those obligations.” bnymellon.com
sanction those applicants or registrants
If adopted, the model rules could
prompt enforcement actions by NASAA
members against violators, including
©2021 The Bank of New York Mellon Corporation. All rights reserved.
revoking their license, the group said.
Specifically, the model rules would add

NOVEMBER 2021 INVESTMENT ADVISOR 11