Caution urged in wake of latest FINRA sweeps

FINRA — the Financial Industry Regulatory Authority — is executing two new industry “sweeps” that suggest high standards of ethics and strict compliance are more important than ever.

The first sweep, announced in Sept. 2007, is to examine whether brokers are using so-called “professional” designations to mislead and defraud investors. FINRA, along with state regulators, are concerned about the growing number of professional designations, particularly those used to suggest special expertise providing financial advice and products to seniors, but that don’t require meaningful knowledge or training.

In the second new sweep, FINRA examiners are looking at early retirement seminars conducted by securities firms designed to entice older workers to liquidate their retirement funds and invest them with a specific firm or representative. In the past year, FINRA has fined two firms a total of $5.5 million and ordered the firms to pay $26 million in restitution related to early retirement investment schemes aimed at Exxon and Bell South employees.