Justin Ginter

Justin Ginter is a litigator and advocate for a wide range of individual and corporate clients spanning multiple industries, including financial services and securities, business solutions, products and manufacturing, telecommunications, and real estate. Justin is known for his sensitivity and understanding of client needs and his dedication to achieving excellent results.

View the full bio for Justin Ginter at the Faegre Drinker website.

Articles by Justin Ginter:


Investors Versus Machines: The SEC Cracks Down on AI, Robo-Advisors and Potential Conflicts of Interest

We are probably still years away from Wall Street being overrun by actual robots. Nonetheless, artificial intelligence (AI) tools are divisively integrating into all aspects of society—from the classroom to the courtroom. Many broker-dealers have also implemented AI-assisted analytics and technology. Indeed, over the last several years, many firms have made investing more easily accessible and user-friendly through “robo-advisors.” No one is questioning the “pros” of AI. But many are still concerned about the risks. The SEC is no different, nor are they any less divided. Here, the SEC has honed in on conflicts of interest that may arise through the use of AI.

On July 26, the Securities and Exchange Commission (SEC) proposed a regulation under the Securities Exchange Act of 1934 and Investment Advisors Act of 1940 to combat what it sees as conflicts of interest arising from using predictive data analytics by broker-dealers and investment advisors. In strong language, the proposed rule seeks to “to eliminate, or neutralize the effect of, certain conflicts of interest associated with broker-dealers’ or investment advisers’ interactions with investors through these firms’ use of technologies that optimize for, predict, guide, forecast, or direct investment-related behaviors or outcomes.” The proposed regulation would require broker-dealers and investment advisors to take steps to address potential conflicts of interest from predictive analysis and similar technologies that interact with investors to prevent firms from placing their own interests ahead of the investors’ interests.

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“Or Worse, Expelled.”

Hermione Granger (yes, from Harry Potter) is famously attributed with the following quote: “I’m going to bed before either of you come up with another clever idea to get us killed. Or worse, expelled.” Unfortunately, cleverness failed to save Salomon Whitney Financial, LLC (SW Financial) recently when FINRA announced that it had followed through with its threats of increased enforcement efforts and expelled the firm and suspended its co-owner and CEO, Thomas Diamante.

FINRA announced on Friday, May 12, that it was expelling SW Financial, in part, because it had violated Regulation Best Interest (Reg BI). This is the first time FINRA has expelled a firm since Reg BI took effect in June 2020. The move by FINRA, however, tracks with its increased rhetoric that it will be cracking down on brokerage firms for Reg BI violations. As we have previously reported, the Division of Examinations of the Securities and Exchange Commission (the Division) has been busy implementing broker-dealer examinations to assess compliance with the regulation.

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