An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

Stockbroker Fined And Suspended For Service As Executor And Having Outside Accounts
Written: September 17, 2012

Giant Gavel

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, William Arnold Blair submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of William Arnold Blair, Respondent(AWC 2011029373701, September 13, 2012).

Blair entered the securities industry in 1982, and from 2001 through August 22, 2011, was registered as a General Securities Representative with Stephens Inc.

OBA

According to the AWC, from December 2009 until August 2011, Blair failed to disclose to Stephens that he had acted as a compensated executor for the estate of a customer.  FINRA deemed such conduct as constituting the nondisclosure to his firm of an outside business activities in violation of NASD Rules 3030 (for conduct before December 15, 2010), and FINRA Rule 3270 (for conduct after December 14, 2010) and FINRA Rule 2010.

Away Account

Additionally, from April 2010 to August 2011, the AWC alleged that  Blair failed to notify his firm that he had opened a securities account at another member firm in violation of NASD Rule 3050(c) and FINRA Rule 2010.

Fine And Suspension

In accordance with the terms of the AWC, FINRA imposed upon Blair a $10,000 fine and a 3-month suspension from association with any FINRA member firm in all capacities.

Bill Singer‘s Comment

Many industry professionals may be scratching their heads — being an executor is an OutsideBusiness Activity (“OBA”)?  For starters, note that FINRA pointedly characterized Blair because he was a “compensated” executor.  So, no, he didn’t undertake the role for free;  moreover, it does not appear that Blair notified his member firm in writing of his role as an executor for a customer.

Many brokerage firms have a very negative attitude about registered persons acting as trustees or executors because it often opens up a whole nasty can of worms about over-reaching and frequently attracts the unwanted attention of lawyers for unhappy family members who didn’t quite get the bucks that they anticipated when good old Uncle Joe or Aunt Jane died.  Consequently, registered persons should always confirm in advance with their employer firm whether serving as an executor for a customer is okay — and if the firm says “yes,” then make sure to comply with all internal notice requirements and FINRA’s rule.

Of course, in Blair we have the regulatory daily double of OBA and Away Accounts violations.  As to employees maintaining brokerage accounts at other firms, it’s not rare and often motivated by something as simple as discounted executions, or the existence of joint accounts with spouses, family members, or acquaintances, and those other parties prefer that the assets be held someplace other than the subject registered person’s employer.

Major financial organizations such as Bank of AmericaWells Fargo,Citigroup, Morgan Stanley, UBS, and JP Morgan face considerable challenges trying to monitor various accounts of their employees and such problems are often exponentially exacerbated when away accounts get tossed into the universe to be monitored. Which may well explain the reluctance of many financial institutions to permit away accounts; and, accordingly, may also explain the focus of FINRA and other regulators on such policies and procedures.  Sometimes it truly is simpler to just say “No.”

OBA Rule

FINRA Rule 3270. Outside Business Activities of Registered Persons  

No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member. Passive investments and activities subject to the requirements of NASD Rule 3040 shall be exempted from this requirement.

Supplementary Material:

.01 Obligations of Member Receiving Notice. Upon receipt of a written notice under Rule 3270, a member shall consider whether the proposed activity will: (1) interfere with or otherwise compromise the registered person’s responsibilities to the member and/or the member’s customers or (2) be viewed by customers or the public as part of the member’s business based upon, among other factors, the nature of the proposed activity and the manner in which it will be offered. Based on the member’s review of such factors, the member must evaluate the advisability of imposing specific conditions or limitations on a registered person’s outside business activity, including where circumstances warrant, prohibiting the activity. A member also must evaluate the proposed activity to determine whether the activity properly is characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirements of NASD Rule 3040. A member must keep a record of its compliance with these obligations with respect to each written notice received and must preserve this record for the period of time and accessibility specified in SEA Rule 17a-4(e)(1).

Away Account Rule

NASD Conduct Rule 3050. Transactions for or by Associated Persons

. . .

(c) Obligations of Associated Persons Concerning an Account with a Member

A person associated with a member, prior to opening an account or placing an initial order for the purchase or sale of securities with another member, shall notify both the employer member and the executing member, in writing, of his or her association with the other member; provided, however, that if the account was established prior to the association of the person with the employer member, the associated person shall notify both members in writing promptly after becoming so associated. . .

For more “Street Sweeper” articles, READ:

Away Accounts

Outside Business Activity 


 
[^top^]

Previous Entries
July 22, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page BrokeAndBroker.com Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS... Read On
July 21, 2014
The customer says: Listen, I'm on the road and can't do it. Go ahead and sign my name. It's okay. The stockbroker is uneasy and asks: You su... Read On
July 19, 2014
Stockbroker Whiffs On Three Email StrikesJuly 18, 2014How nice. How convenient. Customers can actually send emails to their brokerage firms and ask fo... Read On
July 18, 2014
How nice. How convenient. Customers can actually send emails to their brokerage firms and ask for all sorts of things. Gone are the days of voicemail ... Read On
July 18, 2014
It's not always about the fireworks at trial.  Sometimes, the pyrotechnics of the motion practice leading up to the first day of testimony determ... Read On
July 17, 2014
Some registered persons have trouble making ends meet, even with a full-time job as a stockbroker. Other folks just want more -- and they seek outside... Read On
July 16, 2014
This stockbroker wasn't named in the public customer's FINRA Arbitration Statement of Claim caption.  The brokerage firm settled for less than 3%... Read On
BrokeAndBroker.com Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab Commission CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Department of Justice Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker RIA Prison Disclosure NASAA Aguilar FCPA Subway Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Retaliation Variable Annuity Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education OIP Tax Liens Willful CE Unregistered Impersonation Annuities BBVA Business Expenses ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Impersonator Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks RMBS PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Failure To Supervise Apple Time And Price T&P Husband Letter of Authorization LOA Sexism Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Sexist NML Argentina Embezzlement Silver Judgment Bank Fraud Deceased TSSB Trustee Frumento Conspiracy 6th Circuit Proctor Rule 3040 Class Action Beneficiary NYAG Schneiderman Gallagher White Compromise Website TRO Supervision SDNY Piwowar Rule 1122 Article V signature VA Rule 3270 OWB
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+