The establishment of heavier federal and state burdens on broker-dealers providing clients with recommendations, combined with the potential great diversity of state regulation, is yet another blow to the business model of "full-service brokerage," in which broker-dealers provide "suitable" recommendations to individual clients and are compensated by their receipt of securities execution fees. If broker-dealers are going to be tasked as fiduciaries in making any recommendation to investors,…

This is a nice, even if small, sensible exemption that will primarily benefit captive distributors of investment company securities.

This enforcement case illustrates two important concerns in broker-dealer compliance. First, having a "great" compliance manual that, for example, specifies "numerous account risk factors and red flags" is worse than useless if a firm does not execute on them. It simply makes no sense to specify very detailed procedures, and then not execute upon them. Second, anything to do with penny stocks is the third rail of AML/securities law compliance. Any firm that wants to be in the business of…