Davis Polk counsel Carl Emigholz was quoted in Ignites discussing the Financial Industry Regulatory Authority’s (FINRA) reporting requirements. Explaining the requirements, Carl said, “If you have a policy that says you’re not allowed to steal customer assets, then you don’t do anything to [ensure adherence] to that policy, that’s also a violation of the rules.”

Once a firm identifies a theft, FINRA rules require that they report it, remediate, and improve policies and procedures to prevent it from happening again, Carl noted. “That’s one of the benefits of registered entities that are subject to these rules,” he added.

“Just flat-out stealing customer assets is pretty unusual,” Carl said. “One of the foundational obligations of the registered broker-dealer is to protect customer assets. So, you don’t see it that often, although it does happen.”

“Finra Dings Fidelity Over Thieving Stock-Plan Employee,” Ignites (January 10, 2025) (subscription required)

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