2022 - No. 2022-02
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Contributor: George H. Friedman (George@SecArbAlert.com)
(ed: These items are drawn from recent editions of the Securities Arbitration Alert, updated where necessary, and appear here with the permission of the Alert’s publisher. This issue’s column is compiled by the SAA’s publisher and Editor-in-Chief, George H. Friedman. Note that all 2021 and YTD 2022 back issues of the Alert can be downloaded free of charge here.)
FINRA RELEASES REPORT ON INDEPENDENT REVIEW OF “RIGGED PANELS” ACCUSATION: FINDS NO IRREGULARITIES BUT RECOMMENDS CHANGES. FINRA has released the long-awaited report of outside investigators retained to study the “rigged panels” accusation. The June 29 report finds there were no irregularities, but contains several recommended improvements. READ MORE
FINRA FILES FOR IMMEDIATE EFFECTIVENESS RULE CHANGES NEEDED TO CONFORM INDUSTRY CODE TO ENDING FORCED ARBITRATION OF SEXUAL ASSAULT AND SEXUAL HARASSMENT ACT. As authorized in March by its Board, FINRA has filed a rule change proposal to conform the Industry Code to the recently-enacted Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act. READ MORE
CONSUMER COALITION TO SEC: LOOK INTO RIA USE OF PDAAS CALLING FOR NON-FINRA ARBITRATION. A broad coalition of a dozen consumer advocacy groups – including PIABA – has written to the SEC, urging that the Commission investigate the use by RIAs of mandatory predispute arbitration agreements (“PDAA”) providing for the use of non-SRO arbitration fora, such as the AAA or JAMS.  READ MORE
Contributor: George H. Friedman (George@SecArbAlert.com)
(ed: By reading how courts and arbitrators value, view and utilize testifying experts or decide issues experts encounter on a regular basis, one can better serve the fact-finder, more effectively help the client, and more likely avoid a bad experience. For selected court decisions, we draw again from the Securities Arbitration Alert (SAA), and other resources. Note that all 2021 and TYD 2022 back issues of the Alert can be downloaded free of charge here.)
Morgan v. Sundance Inc., No. 21-328 (May 23, 2022); Southwest Airlines Co. v. Saxon, No. 21-309; (Jun. 6, 2022); ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401 (Jun. 13, 2022); Viking River Cruises, Inc. v. Moriana, No. 20-1573 (Jun. 15, 2022). The Supreme Court just concluded a very busy Term that included an unprecedented five arbitration-centric decisions (all of which we have covered in detail). See Friedman, George, After a Lull in 2021, a Busy Year Ahead Arbitration-wise for SCOTUS, 2021:48 SEC. ARB. ALERT 1 (Dec. 23, 2021). Four of these decisions were released in a fairly compact time period in late May to mid-June 2022.  READ MORE
Compton v. Merrill Lynch and Buck, FINRA ID No. 20-02468 (Memphis, TN, May 6): As widely reported in the media, a former Merrill Lynch broker, who had earlier this year been released from prison after serving a three-plus year sentence resulting from his misconduct, was hit with a more than $7 million Award. READ MORE
Kent Kirby v. UBS Financial Services Inc., FINRA ID No. 21-01152 (Nashville, TN, Sep. 17, 2021): In a timely move, the Alabama Securities Commission (“ASC”) raises serious questions about the procedure employed in a recent FINRA expungement proceeding, giving the forum some more to consider as it begins focusing on reform of the procedure for excising customer dispute information from brokers’ registration records. READ MORE
Contributors: SEC-Hollie Mason (hollie.mason@brattle.com) and FINRA-Jerry DeNigris (jdenigris@riversidefinancial.com)
(ed: Keeping abreast of rulemaking and other regulatory initiatives can be a full-time job. This compilation is a summary of regulatory actions and comments and is not meant to be an all-inclusive substitute for individual research via the various regulatory sites.)
Proposed Rule Change to Amend the Code of Arbitration Procedure for Industry Disputes (“Code”) to Align the Code with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021 FINRA is filing with the SEC a proposed rule change to amend the Code of Arbitration Procedure for Industry Disputes to align the Code with the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act of 2021. The proposed rule change would also make a conforming amendment to FINRA Rule 2263.  PDF of the Proposal
Contributors: Rotating Practice Management Committee Members
(ed: In response to survey requests, we have added a new column to provide quick and helpful tips from seasoned experts relating to operating a successful expert practice.)
"15 Cross-Examination Tips For Securities Expert Witnesses"
by SER Member Bob Lawson, CSCP®, MRFC®, AIF®, CFE®, LUTCF®

Cross-examination is one of the most challenging aspects of being an Expert Witness. To be an effective Expert Witness, you will need to understand the objectives of the opposing counsel which are to diminish your credibility during your cross-examination and use your missteps to support their case. Remember, the opposing counsel will be listening to every word of your testimony.

A successful cross-examination requires utilization of several techniques to maintain your credibility, impartiality, and ideally bolster your opinion(s).

Here are a few of my favorite tips for maintaining credibility.

  1. Remember that it is not your job to win the case. 
  2. Always be truthful because it is your legal and ethical obligation to do so. 
  3. Answer questions accurately, without exaggeration. 
  4. Ask for clarification, if needed, before responding. 
  5. Act dignified and polite, and never argumentative. 
  6. Never act as an advocate by showing signs of bias.
  7. Memorize the key facts of the case.  
  8. Listen with extraordinary care to each question.  
  9. Deliver your opinions in a simple, understandable, and truthful manner.  
  10. Maintain strict control over your responses. 
  11. Arrogance can damage your credibility. 
  12. Staying humble and confident in your demeanor will bolster your credibility.  
  13. Your opinions should be based on industry rules and standards of care.
  14. Limit your responses to only the scope of the underlying matter for which you were retained and do not elaborate outside of that scope unless asked upon.  
  15. Prepare for your cross-examination by going through the anticipated questions you are likely to be asked. 
Contributor: Patti Koetting (pk@pkoetting.com)
(ed: Whether it’s writing an article, hosting an event, joining a professional committee, or just pursuing a smart practice, we report on member's efforts here. Look to the “Newsroom” section of the SER Website for more frequent, timely reports on the activities of our members.)
SER member James A. Kyprios has written a second article for our member Library titled, "GAAP vs. Non-GAAP and the Abuse of EBITDA—A Confusing Issue". The paper discusses the history behind "the mistrust of GAAP impelling the use of non-GAAP measures", specifically EBITDA, and the current implications. READ MORE
The nationally accredited financial Master Registered Financial Consultant (MRFC®) Certification Program has elected SER member Robert Lawson, MRFC® as the new Chair of its Board of Directors. READ MORE
SER member Keith Loveland has received rave editorial reviews for his debut novel, The End of The Empire. Recently published, the story follows the lives of two wartime buddies as they navigate the decades following World War II. READ MORE
MEET OUR NEWEST MEMBERS! (Click on a name to view the full profile on SER's website, where you can also access their contact info and website. Better yet, reach out and connect to find out more about them.
Ted Cashion - Ted brings more than 36 years of financial services experience, holding the Accredited Wealth Management Advisor (AWMA®) and the Chartered Retirement Plans Specialist (CRPS®) designations from the College of Financial Planning. He is registered with FINRA as a Registered Investment Advisor Representative and holds state licenses to provide life, disability and long-term care insurance.
Jim Reilly - Jim is a senior compliance executive with over 30 years of experience in the securities industry. With a history of working as a Chief Compliance Officer at some of the leading Wall Street firms, he is a highly seasoned professional, experienced in all facets of compliance and operations for Broker/Dealers, Investment Companies, and Registered Investment Advisers.
David Hinman - David has more than 25 years of global asset management, banking, and finance experience. He is an accomplished business leader, entrepreneur, and investment manager, possessing a deep knowledge of the institutional financial services industry, having 20 years of hands-on portfolio management experience.
If you have a potential member to nominate, please contact SER's Membership Chair Elizabeth Falk (elizabeth@falkfinancialanalysis.com).
Contributor: Patti Koetting (pk@pkoetting.com)
(ed: This column seeks to apprise members of events, products and services that can be useful to them in their professional activities. Unless specifically stated, SER does not endorse or sponsor any of the products and services mentioned herein.)
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Final Note: The Contributors are members of the SER Public Relations Committee. They have designed this newsletter for the membership and worked to gather material for this issue. Members can help by sending Contributors information and suggestions for content in future issues. Members should also visit SER's "Newsroom" section of the Website periodically, as many of the items that appear here will be first posted in the Newsroom.
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