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FINRA's scandalous litany of failures and its efforts to redefine the true fiduciary standard out of existence

Our one-man think tank continues his scathing indictment of the SRO's disingenuous and downright fraudulent practices

Author Guest Columnist Ron Rhoades July 17, 2013 at 3:10 AM
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Ron Rhoades: Shouldn't the phrase: 'member, FINRA' be viewed like the warnings on cigarette packages -- i.e., as a consumer warning sign?

Stephen Winks

Stephen Winks

July 17, 2013 — 7:33 PM

What is so elloquent about Ron Rhoades brilliant insight into FINRA is he sticks to the facts, just the facts and lets them speak for themselves.

This type of observation takes thousands of hours and extraordinary indepth understanding which is uncommon in lay journalist, yet essential to addresing the loss of trust and confidence of the investing public.

FINRA and the SIFMA, formerly the National Association of Broker/Dealers and the Security Industry Assiociation, are trade associations which have been given extraordinary Federal self regulatory powers by Congress. The only problem is they both still act as industry trade associations rather than protectors of public trust in the consumer’s best interest. Those trade association duties were rendered secondary at best when the responsibilities of an SRO were assumed. As Ron Rhoades outlines, the best interests of the investing public have been consistently subordinated to the industry’s best interest.

FINRA and the SIFMA should only retain their SRO powers if they advance the best interest of the investing public. If they can not protect public trust, their SRO powers should be removed and they should continue as industry advocates. A new SRO that actually protects public trust and fiduciary standing in the consumer’s best interest (as Ron suggests) must emerge to resolve our present conflicted and unworkable regulatory regimen in the consumer’s best interest.

SCW

Jim Hallett

Jim Hallett

July 17, 2013 — 8:45 PM

Mr. Rhodes, if there was a “Pulitzer” for investigative work in this area, you would have my vote!

By sticking to the facts, the truth wins. And, when the truth wins, the Public benefits. It is an honor and a privilege to serve in a fiduciary capacity.

JP

JP

July 18, 2013 — 5:13 PM

Finally someone is telling the truth! Please keep writing, eventually enough people will read your articles and perhaps force our lawmakers hand. The last article on FINRA’s mandatory arbitration hit the nail on the head; I believe this is an extremely important issue, and many injustices are done in these hearings. You are doing a great service by publishing this information. Thank you!

bobby allison

bobby allison

July 18, 2013 — 5:53 PM

Very well done! Mr. Rhodes is correct. Furthermore, FINRA has allowed it’s clout to benifit powerful members of their CLUB to choke unwanted competitors in regional and local markets out of the industry. Many of the victims of these unprecented actions espoused the fiduciary business model. The SEC and FINRA completly blew the Stanford matter!

ds

ds

September 12, 2013 — 8:19 PM

“The failed 'suitability doctrine’ continues to permit 's***y’ products to be sold to individual consumers.” Please explain how being a fiduciary will prevent this from happening. I am amazed at how people in this industry look at “fiduciary” as some kind of magic wand. Madoff was a fiduciary. Stanford was a fiduciary. How many other countless ponzi schemes were hidden under the cloak of the fiduciary standard?

I bet all of the victims of those fiduciary ponzi schemes would have much preferred to have had their investments at brokerages “under the horrendously low standard of suitability.”

Stephen Winks

Stephen Winks

September 12, 2013 — 10:34 PM

ds,

Advisors are not product focused, they are focused on comprehensive portfolio management and addressing and managing investment and administrative values on behalf of the client in the client’s best interest. Their compensation is derived from rendering advice not contingent on the consumer buying a product.

Pretty simple, fiduciaries always work for the client’s best interest not their own. This is not to say every recommendation works as intended, but it does say the recommendation was not influenced by self interest.

SCW

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Dick Van Dyke

Dick Van Dyke

March 22, 2015 — 4:49 PM
Dick Van Dyke of Springfield, IL “Innocent”

Dick, Rebuts False Allegations of Fraud & Discusses his Innocence!

The first unanswered question and the one of several that beg to be answered are; since Dick’s clients are ALL satisfied and not seeking any form of relief why is the State of Illinois Securities Department levying a $353,000 dollar liability against Dick Van Dyke that does not compensate any “so called victims”?

Second question; why retroactively revoke Dick’s securities license when his clients in question are, non-securities, fixed index annuity only – satisfied insurance clients?

Third question; why is the State of Illinois Department of Securities claiming new jurisdictional authority over annuity insurance products that have been unambiguously excluded as a security for ninety years of IL legislative history?

Fourth question; why did the Illinois Department of Insurance (the agency with undisputed jurisdiction) settle amicably with no reference to fraud or dishonesty and accept that Dick admitted to no violations while allowing him to remain insurance licensed in good standing?

Fifth question; why did the Illinois Attorney Generals office settle amicably with no reference to fraud or dishonesty and accept that Dick denies any wrongdoing?

And Now – The Rest of The Story!

Until now, I (Dick Van Dyke), have remained mostly silent about the several cases filed by State of Illinois agencies against me. From the time these cases began almost four years ago, I have seen quite a twist of events. I now know that the Illinois Department of Securities (IDOS) initially acted on a complaint that had been filed against my firm by a competing financial advisor. It is significant that to my knowledge, there have been no client complaints nor any form of relief sought by clients even though the IDOS urged my clients to turn against me and accept as true the IDOS allegations. The same competitor – financial advisor entered complaints with The Illinois Department of Insurance (IDOI) and The Illinois Attorney General’s (IAG) office. All three State agencies as a result of my competitor’s complaints joined together against me while seeking huge penalties totaling about $500,000.00 in aggregate.

In a true twist of fate, David Lisnek, (DL) the competitor – financial advisor who originally initiated the State’s actions against me and also made the only complaints against me has since been arrested on felony charges, pleading guilty to stealing about $63,000 from an 84 year old woman. He is now on probation which is a matter of public record. Docket detail for David Lisnek case 2013-CF-001163, Illinois, Sangamon County records. Search under “Case Search” tab and then by name at the second link below.

DL Arrested: http://www.wandtv.com/story/24143455/man-arrested-for-allegedly-defrauding-senior DL Guilty Plea: http://records.sangamoncountycircuitclerk.org/sccc/NameSearch.sc DL Complaints against me: https://files.acrobat.com/a/preview/60c8346d-f3fe-4589-bbe4-469de529ef9b

I have now settled amicably with two of the above agencies. I refused to settle with IDOS.

The Illinois Attorney General’s (IAG) office initially made multiple allegations that my website contained inaccurate and deceptive information about my qualifications and the scope of my insurance business. The IAG settled with me by requiring a $5,000 voluntary contribution to a state education fund. My denial of any wrong doing ultimately was accepted and specifically addressed in the settlement. As a resolution to the IAG case, I agreed in the future to always construct my website and to conduct my financial practice in a manner that provides full disclosure of all material facts – which I maintain I have done at all times.

IAG Settlement: https://files.acrobat.com/a/preview/03dcf768-b5b3-49a6-a107-46973eb09fbf

The Department of Insurance (IDOI) case alleged that I had failed to prepare or accurately complete certain annuity disclosure forms for my clients and for the annuity policy issuing companies. Again, it is my understanding that none of my clients or any annuity policy issuer ever raised a complaint about these forms to the IDOI. While I originally thought that my completion of the particular annuity forms was completely accurate, I later learned that additional information should have been considered and referenced when these forms were submitted to the annuity policy issuer.

In recognition of what could be considered an error in completing these forms, I proposed a mutually agreed settlement to the IDOI. As a part of this settlement, I agreed to a $6,000 civil penalty. I also agreed to complete all future paperwork accurately and correct. I also agreed to obtain insurance carrier approvals when advertising their products – which I maintain I have done at all times.

IDOI Settlement: https://files.acrobat.com/a/preview/ef98f1ff-a9ab-4a3b-bc95-fc1c84da921b

However, I have consistently refused to accept any settlement offer from the Illinois Department of Securities (IDOS). Thus, I am still in a costly high stakes legal battle with them. Two key factors in my IDOS appeal involve: The IDOS lack of lawful jurisdiction – whether fixed index annuities are insurance products or securities; and the fact that the IDOS has no client complaints or any negative client testimony recorded against me.

I maintain that the IDOS has no lawful jurisdiction over my sale of annuity insurance products. The IDOS has falsely mischaracterized all of the fixed index annuity insurance products that I sold as securities while intentionally disallowing any consideration for the additional insurance benefits or monetary gain my clients obtained from their new annuities. The very statute that they have used to bring their administrative case against me specifically and unambiguously excludes insurance company annuities from being treated as a security under Illinois law.

My opinion: I am thankful that rational minds at the Illinois Department of Insurance and The Illinois Attorney General’s office finally prevailed to reconsider the facts of my case and settle fairly with me – having no further references to dishonesty or deceptive business practices.

I only wish more rational consideration would have prevailed from the beginning, sparing me from so much unfair negative press that has seriously harmed both my reputation and business. In addition, it could have saved me over $300,000 in legal fees, so far.

This, unfortunately, has been a David versus Goliath type of legal battle; given my limited financial resources compared to that of the State of Illinois’ almost inexhaustible legal resources.

Kindest Regards,
Dick Van Dyke


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