For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Robert Worthington Vincent submitted a Letter Of Acceptance, Waiver And Consent ("AWC"), which FINRA accepted. In The Matter Of Robert Worthington Vincent, Respondent (AWC 20110261912, June 25, 2012).
In October 2004, Vincent became a General Securities Representative with ING Financial Advisers, LLC ("ING Advisers"); and, thereafter, in January 2011 became associated in that capacity with ING Financial Partners, Inc.("ING Partners") pursuant to a bulk registration transfer between those firms.
On February 18, 2011, Vincent was purportedly discharged by ING Partners, which filed a Uniform Termination Notice For Securities Industry Registration Or Transfer ("Form U5″) dated February 22, 2011, explaining that he "did not provide prompt notice to his previous member firm [ING Advisers] and FINRA for multiple financial and other disclosure events."
A First Slip-Up Is Corrected
In May 2010, ING Advisers allegedly determined that Vincent had engaged in a reportable outside business activity and the firm caused his Uniform Application For Securities Industry Registration Or Transfer ("Form U4″) to be amended to reflect that factor.
One License Down
By letter dated July 7, 2010, Vincent was allegedly notified by the Missouri Department of Insurance that his professional insurance license had been suspended because of his failure to file a tax return and/or to pay currently due taxes. Although required to timely notify ING Advisers and to timely amend his Form U4 to report the suspension, Vincent allegedly failed and his firm only first became aware of the event around December 17, 2010.
After his January 3, 2011, association with ING Partners, that firm determined that Vincent had failed to timely disclose on his Form U4 several events; and on February 8, 2011, the firm amended his Form U4 based upon information he provided regarding the following previously unreported disclosure events: :
State of Missouri Department of Insurance License Suspension Notices
- July 2010
- December 2005
Compromises With Creditors
- $5,887 owed to creditor. Settled for $2,943.63 in October 2006
- $13,223 owed to creditor. Settled for $4,363.68 in March 2006
- $14,240 owed to creditor. Settled for $ 1,017.17 in December 2005
- $10,394 owed to creditor. Settled for $5,927.48 in July 2005
- State of Missouri Department of Revenue Tax Lien for $33,074.17 dated March 2005, which was released September 2006
- State of Missouri Department of Revenue Tax Lien for $ 12,997.87 dated May 2010, which was outstanding as of February 8, 2011
- Civil Judgment for $8,954 dated August 2006, which was unsatisfied until March 2010
- City of Kansas City, MO Civil Judgment dated June 2004 for $6,813.84, which was satisfied September 2005
SIDE BAR: Insurance license suspensions, compromises with creditors, unsatisfied judgments and liens, and outside business activity, are among the items that must be disclosed on the Form U4.
The AWC alleges that by willfully failing to timely amend his Form U4 not later than 30 days after learning of the facts and circumstances giving rise to the required amendment, Vincent violated Article V, Section 2(c) of the NASD By-Laws, prior to July 30, 2007, and Article V, Section 2(c) of the FINRA By-Laws thereafter, and NASD Rule 2110 until December 15, 2008, and FINRA Rule 2010 thereafter.
In accordance with the terms of the AWC, FINRA imposed upon Vincent a $5,000 fine and a six-month suspension from association with any FINRA member in any capacity.
As noted in Statutory Disqualification for Undisclosed Tax Liens Sustained by FINRA, SEC, and Federal Court ("Street Sweeper" February 21, 2012), which reported about a case involving some similar considerations about undisclosed tax liens, I noted:
SIDE BAR: Why the big stink over whether Mathis intentionally/willfully or inadvertently engaged in the cited omissions about the liens on his Forms U4? Frankly, it's a stark and critical distinction.
According to §§ 3(a)(39)(F) and 15A(g)(2) of the Exchange Act, 15 U.S.C. §§ 78c(a)(39)(F) and 78o-3(g)(2), a finding of wilffulness would subject Mathis to a "statutory disqualification," or bar, from associating with any FINRA member firm - and such a bar is set in motion notwithstanding that a FINRA Hearing Panel merely imposed a monetary fine and/or a lesser suspension.
Pro se respondents or inexperienced defense lawyers frequently fall into the trap of agreeing to settle a Form U4 non-disclosure allegation for a modest fine and suspension - not realizing that when they agreed to a finding of "willful" non-disclosure that in addition to the fine and suspension, the respondent would be deemed disqualified from securities industry association (and, by extension, possibly to other endeavors).
For further explanation and examples, Statutory Disqualification (RRBDlaw.com)
In the aftermath of the Great Recession, many employees of Merrill Lynch, JP Morgan, Morgan Stanley, and similar behemoths found themselves financially underwater, as did their counterparts at regional and indie firms such as LPL or Schwab. Although Vincent involves undisclosed events that largely occurred prior to the onset of the Great Recession, the case underscores the how one's history can come back and bite you. What's seems to have undone Vincent was the bulk transfer of registrations to ING Partners, which required updated Forms U4 - which seems to have awaken a number of sleeping dogs.
Also see this prior ING U4 Lien case: FINRA Hits ING Brokers For Untimely U4 Lien Disclosures (September 8, 2011)