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Regulatory pressures dialed up on licensed financial professionals

California’s financial professionals have always faced stringent regulatory hurdles, ranging from license challenges to liability risks.

Financial advisers, stockbrokers and related industry professionals come under close scrutiny from government officials focused upon fraud allegations. Most of those individuals fall under the keen oversight of the federal Financial Industry Regulatory Authority. FINRA investigates money managers’ alleged wrongdoing and has potent disciplinary powers.

The parent authority of FINRA is the U.S. Securities and Exchange Commission. The SEC created the agency and has figuratively turned up the heat in a big way on the industry in recent years. The SEC has been especially active in its probes and disciplinary hearings involving financial professions in the wake of the country’s so-called Great Recession. The commission was given expanded powers pursuant to the 2010 enactment of the Dodd-Frank Act, and it has aggressively implemented them.

One notable result of the SEC’s amped-up presence in the financial industry was its creation of a robust securities whistleblower program back in 2011. A recent Wall Street Journal article stresses that the initiative has turned a previously impotent platform for securities-fraud reporting into a powerhouse. Reportedly, the agency received more whistleblower tips concerning fraud in the past fiscal year than in any prior year. On top of that, the nearly 5,300 tips received last year resulted in awards granted last year that exceeded outlays during the prior six years combined.

That should spell a pretty clear reality to licensed financial professionals across California and the rest of the country. The profession is unquestionably under an unprecedented level of regulatory scrutiny. The potential downsides for any given adviser or brokerage firm are greater than ever before.

Industry professionals with questions or concerns regarding liability, their valued licenses or a related matter might reasonably want to confer with attorneys from the Century Law Group (with offices spanning California). As we note on our website, the firm “specializes in the defense of financial professionals involved in FINRA hearings as well as other professional liability defense.”

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