Former Associated Person; Along with general securities licenses, S-3, S-4, S-5, S-8, S-15 and S-24
During my active registration, I served as a branch, complex, regional, divisional and national Director.. Much of my experience related to the opening and supervision of option transactions. Since my retirement in 2004, I have maintained an active expert witness practice, primarily working from the Plaintiff or Claimant perspective. I have consulted on more than 700 arbitration or court cases (including state and federal criminal activity) and testified in excess of 100 times, very often related to options sales practice. Your initiative is very important since I have often observed that advisors, their supervisors, national sales management, and FINRA Arbitrators are sorely deficient in their understanding of option risks and characteristics and other derivative strategies. For example, I recently observed the testimony of an FA, lacking any specialized training or advanced licenses, refer to himself as an "Option Expert". I am certain he communicated that ludicrous claim to his clients. It was an absurd comment. Additionally, I find that it is impossible to accept that option product arbitration claims, with almost identical fact patterns, have dramatically different award results. If the product is seriously flawed, the firm has failed in its reasonable basis suitability review, and thus has liability. Yet, award results do not reflect that observation. The decisions do not reflect equity. To be clear, volatility trading, with no cost execution, is far from traditional option activity, but in my opinion, it is a new and permanent asset class. Disparage it if you like, but that will not constructively address the obvious challenges. I am glad to expand on my comments, but succinctly, advisors, supervisors, national sales management, and Arbitrators are poorly prepared to effectively address the exponential growth in derivative trading. Changes are long over due.
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Louis Straney Comment On Regulatory Notice 22-08
During my active registration, I served as a branch, complex, regional, divisional and national Director.. Much of my experience related to the opening and supervision of option transactions. Since my retirement in 2004, I have maintained an active expert witness practice, primarily working from the Plaintiff or Claimant perspective. I have consulted on more than 700 arbitration or court cases (including state and federal criminal activity) and testified in excess of 100 times, very often related to options sales practice. Your initiative is very important since I have often observed that advisors, their supervisors, national sales management, and FINRA Arbitrators are sorely deficient in their understanding of option risks and characteristics and other derivative strategies. For example, I recently observed the testimony of an FA, lacking any specialized training or advanced licenses, refer to himself as an "Option Expert". I am certain he communicated that ludicrous claim to his clients. It was an absurd comment. Additionally, I find that it is impossible to accept that option product arbitration claims, with almost identical fact patterns, have dramatically different award results. If the product is seriously flawed, the firm has failed in its reasonable basis suitability review, and thus has liability. Yet, award results do not reflect that observation. The decisions do not reflect equity. To be clear, volatility trading, with no cost execution, is far from traditional option activity, but in my opinion, it is a new and permanent asset class. Disparage it if you like, but that will not constructively address the obvious challenges. I am glad to expand on my comments, but succinctly, advisors, supervisors, national sales management, and Arbitrators are poorly prepared to effectively address the exponential growth in derivative trading. Changes are long over due.