The TRACE reporting rules have turned out to be complicated and difficult to implement. Many broker-dealers (and law firms) struggle with their interpretation. Rather than imposing fines, FINRA should use incidents of violations as teaching moments to explain in detail what the relevant firm did wrong.  

The CFPB's rule has now survived challenges both from Congress and in court, which suggests that the rule is likely here to stay. Assuming that appeal from this case, or any other litigation challenges that may affect this rule are unsuccessful, lenders should prepare to meet these compliance obligations now, if they have not already started. The requirements are significant and will require changes to loan application intake, tracking, privacy and recordkeeping procedures. 

As Commissioner Peirce states in her dissent, this enforcement action seems divorced from the underlying policy of the relevant rule. The advisory firm had been awarded the relevant business years before either the individual was hired or the contribution was made. The contribution was made before the individual was hired and subsequently was returned (but the return was legally ineffective as it did not meet the conditions of the rule).  

If the injustice of the…

Was it something the SEC said?