- Complaints and Your Compliance Officer
If a customer brings forth a formal complaint, you must bring the complaint to the attention of your compliance officer, and/or broker-dealer.
It is considered fraudulent to guarantee any returns to any client.
- Commingling funds
It is considered fraudulent to commingle funds in an account, unless:
- written authorization is granted by the firm.
- an agent contributes equally (monetarily) to the account.
- Profit sharing
It is considered fraudulent to share in the profits of a client's account - unless the account is dually owned with proportionate funds. Furthermore, if an account is proportionately owned, written notice must be supplied (and approved) by the broker-dealer.
Antifraud is always hot topic with the FINRA, especially with regards to Anti-money laundering. exam.
- Front running
Front running is an unethical practice that occurs when a broker trades equity based on information from the analyst department before his or her clients have been given the information.
Tailgating occurs when a broker or advisor is purchasing or selling a security for his or her client(s), and then immediately making the same transaction in his or her own account.
- Painting the tape
Painting the tape is an illegal action that occurs when a group of market manipulators are buying and/or selling a security among themselves to create artificial trading activity, which, when reported on the ticker tape, lures unsuspecting investors as they perceive an unusual volume.This behavior is similar to matching orders.