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FIRMS DISCIPLINED UNDER NASD TAPING RULE

Posted by: Robert Rex
January 09, 2012
Topic: FINRA DISCIPLINARY ACTIONS

It is not uncommon for small (and sometimes not so small) brokerage  firms to go out of business or to be expelled from FINRA membership for various disciplinary reasons. When a firm is expelled or has its FINRA registration revoked, the brokers  (who comprise the salesforce of a brokerage firm) must look for employment elsewhere. Given the fact that this salesforce may have contributed to the reason for the firm's expulsion, FINRA instituted a rule in 1998 requiring taping of broker's conversations with customers in certain instances.

Whenever a a brokerage firm has a salesforce comprised of a specified number (40% in small firms and 20% in large firms) of brokers who were previously employed by a firm that was expelled from FINRA membership within the last three years, the Taping Rule applies. Under this rule the firm is required to adopt special written supervisory procedures to supervise the telemarketing activities of all of its registered persons (brokers).

Link to the Taping Rule in NASD Notice to Members 98-52:

http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p004858.pdf

The FINRA website currently lists the following firms as having been disciplined under the Taping Rule during the past three years:

AIS Financial, Inc.

APS Financial Corporation

Aura Financial Services, Inc.

Brewer Financial Services, LLC

Dolphin & Bradbury Incorporated

ITRADEdirect.com Corp.

Meeting Street Brokerage, LLC

Melhado, Flynn & Associates, Inc.

MICG Investment Management LLC

Mission Securities Corp.

MMR, Inc.

Morgages  LTD Securities, LLC

North American Clearing, Inc.

Prestige Financial Center, Inc.

Provident Asset Management, LLC 

If you have a question about the way your brokerage account is being handled, please give us a call at 561 391 1900, email rhr@dmrslaw.com or visit our website at http://www.dmrslaw.com/Securities-Arbitration-Administration/index.html .

 

 

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