Faculty Notes

Prof. Ronald Colombo Comments in On Wall Street on Outcome of FINRA’s Investigation of Ameriprise

Ronald J. Colombo, Professor of Law

FINRA Finds Fault With Ameriprise and Advisor for Altered Documents
By Suleman Din
On Wall Street
Oct. 15, 2014


An Ameriprise advisor has been fined and temporarily suspended by FINRA, and the brokerage was censured and fined as well after an investigation detailed how the advisor altered documents of a client he faced in arbitration hearings, and the firm knowingly kept quiet about the changes. …

FINRA arbitration experts said they could not recall an example of a case involving doctored files before an arbitration panel and an intentional effort to keep it from a complainant.

“Personally, I think this is as bad as it gets,” said Ronald J. Colombo, associate dean for academic affairs at the Hofstra University School of Law, and a regularly serving FINRA arbitrator.

Colombo added that the case was illustrative of the informality of FINRA arbitration hearings. “It’s pretty much a black box about what goes on. A lot of these matters are resolved through best efforts and informally among parties.

“The panel does not conduct its own investigation,” Colombo added. “It relies on parties to present cases. A panel does have an obligation to report to FINRA if there is reasonable suspicion of something wrong, but that’s a high threshold. It’s a volunteer panel, and it is going to rely heavily on the parties to lead them on the evidence.”

Read the full article (registration required).