Anti-Fraud Provisions

What this video covers

• Why the FINRA standards of commercial honor can charge unethical conduct with no specific factual element, no customer harm, and even off-the-job behavior
• How the FINRA prohibition on manipulative, deceptive, or other fraudulent devices operates as the SRO-level analog to the Securities and Exchange Commission (SEC) antifraud rule
• The three prongs of the general antifraud provision: scheme to defraud, misstatement or omission, and fraudulent course of business
• Why materiality is the gatekeeper for the misstatement-or-omission prong, and how trivial omissions fail the test
• The broker-dealer antifraud hook and its specific definition of completion of the transaction
• The criminal-penalty memory aid: $5 million individual fine, 20 years individual prison, $25 million entity fine for willful violations
• Why lack of knowledge of the rule is a defense only to imprisonment, not to fines