FINRA Fines and Suspends Rep for Transferring Customer List to New Employer (BrokeAndBroker.com Blog)An Activist Investor Crusades Against Forced Arbitration at Tesla / The electric-car maker has faced multiple allegations of racial discrimination.(Bloomberg by Dana Hull)
The widespread use of forced arbitration has come under fire since the #MeToo movement exposed it as a tool that effectively keeps harassment complaints quiet. In recent years, employee and shareholder activists pushed several large companies, including Facebook Inc., Microsoft Corp., Uber Technologies Inc. and Lyft Inc. to end its use for sexual harassment cases. But racial dynamics are just as pernicious, and Black Lives Matter is now drawing more attention to its role in discrimination claims."Arbitration is used as a form of claim suppression," Cliff Palefsky, a San Francisco employment lawyer, who has testified before Congress about mandatory arbitration, said of the practice broadly. "Instead of court, it's a secret tribunal with no right of appeal."
[B]etween September and December 2015, Kirk Sperry, by and through his family business, Sperry and Sons Capital Investments, LLC, fraudulently raised $125,000 from two investors in connection with a multi-million dollar residential project in Williston, North Dakota. According to the complaint, Kirk Sperry solicited the investments using a number of false and misleading statements. These included allegedly stating that the investment would be secured by a first position mortgage on the property when in fact a different investor and business partner held first position, and claiming that there were purchase agreements in place for certain lots, when those purchase agreements had been cancelled already. Further, the complaint alleges that Sperry and Sons, with Kirk Sperry's knowledge and consent, used part of the funds received from the investors to make payments to other investors in unrelated Sperry and Sons projects.
In November 2017, a registered person associated with SeedChange completed an outside business activity form, disclosing his involvement with a digital assets investment fund as a portfolio manager and an active owner of the fund's general partner. SeedChange approved the outside business activity. Between November 2017 and March 2018,2 the registered person raised at least $525,000 for the investment fund from six accredited investors, none of whom were SeedChange customers. As part owner of the fund's general partner, the registered person was entitled to and received a management fee for his work with the fund.The firm's written supervisory procedures in effect at the time did not address the requirements of FINRA Rule 3270.01. Specifically, the firm had no written procedures to evaluate the factors enumerated in FINRA Rule 3270.01 and to determine if restrictions should be placed on an outside business activity or whether to prohibit the activity. Nor did the firm have any written procedures requiring the evaluation of a proposed outside business activity to determine whether it should be properly characterized as an outside securities activity.Despite knowing that the registered person's outside business activity was investment related, SeedChange failed to evaluate whether the registered person's proposed activities as portfolio manager of a digital assets investment fund would interfere with or otherwise compromise his responsibilities to the firm or the firm's customers or be viewed by customers or the public as part of the firm's business. The firm also failed to evaluate whether the registered person's involvement with the fund should be restricted or prohibited, whether it was characterized properly as an outside business activity, or whether it should have been treated as outside securities activity.= = = = =Footnote 2: The firm terminated the registered person in early March 2018 for reasons unrelated to the registered person's involvement with the investment fund.