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

Undisclosed Bankruptcies,Tax Liens and Judgments Derail Stockbroker
Written: November 13, 2012

A picture taken on February 8, 2011 in Rennes,...

Robert D. Tucker entered the securities industry in 1989, and during some 20 years since becoming a registered representative, he has associated with 23 Financial Industry Regulatory Authority (“FINRA”) member firms. Starting in 2000, he accumulated the following history:

  • AMEX: On March 3, 2000, a Civil Court of the City of New York entered a $10,058.62 default judgment against Tucker in favor of American Express Travel Related Services Co., Inc. relating to an unpaid credit card balance.
  • The Hamlet Golf & Country Club, Inc.: On July 17, 2002, the country club obtained a judgment against Tucker and his wife for $37,511.67 relating to unpaid membership fees.
  • Internal Revenue Service: On June 4, 2002, IRS filed a federal tax lien of $329,917.63 against Tucker.
  • Chapter 11 2002: On June 10, 2002, about a week after the federal tax lien was filed, Tucker filed a voluntary bankruptcy petition under Chapter 11, but it was dismissed on April 15, 2004.
  • Chapter 11 2004: On August 3, 2004, Tucker filed a second Chapter 11 petition and on September 8, 2005 it was converted to a Chapter 7, which was terminated on July 20, 2007.
  • NYS Tax Commission: On September 19, 2006, the New York State Tax Commission filed a $7,980 lien against Tucker for unpaid state taxes.
  • Friedman, Schnaier & Associates Judgment. On December 18, 2007, several months after Tucker left Prestige Financial, the Supreme Court of the State of New York entered a $48,000 judgment against him in favor of Friedman, Schnaier & Associates, a brokerage firm owned by Prestige Financial.

No, No, No…

The Uniform Application For Securities Industry Registration or Transfer Forms (“Forms U4″) submitted and certified as accurate by Tucker during the relevant times asked whether he had:

  • any unsatisfied judgments or liens against him
  • within the past ten years, “made a compromise with creditors, filed a bankruptcy petition, or been the subject of an involuntary bankruptcy petition” within the past 10 years.

On each Form U4, Tucker responded “NO” to the judgments/liens and bankruptcy questions.

FINRA Investigates

In 2008, FINRA opened an investigation into Tucker’s disclosures.  As for the judgments and liens, Tucker said he did not disclose them because he had contested them, and while he acknowledged that some of his employing firms “pretty much didn’t know about” some of the judgments and liens, he later asserted that some of his employing firms were partially responsible for his failed disclosures – pointedly claiming that they either knew of the events or he had spoken with compliance officers and was told to delay correcting them until his legal liabilities were resolved.

A Matter of Counsel

By November 17, 2009, the first date for the FINRA Office of Hearing Officers (“OHO”) disciplinary hearing, Tucker did not appear and alleged that he had been ill and unable to participate. The hearing officer rescheduled the hearing for November 20, 2009. On November 19, 2009, Tucker filed an emergency motion asking for a further postponement for health issues and retention of counsel.

At the final pre-hearing conference on December 1, 2009, Tucker said that he had chosen counsel whose schedule required a further delay in the hearing. He would not, however, reveal counsel’s identity when asked. The parties agreed that the hearing would begin on January 21, 2010. Notwithstanding his earlier statements, Tucker represented himself at the OHO hearing.

Getting The NAC Of It

Following the FINRA OHO hearing at which he appeared pro se and subsequent to his appeal to that self-regulatory organization’s National Adjudicatory Council (“NAC”), at which he was represented by counsel, Tucker was found to have failed to disclose on his Form U4 from 2001 through 2008 (while registered with 11 different firms):

  • two bankruptcies,
  • a federal tax lien,
  • three judgments, and
  • one state tax lien

in violation of NASD Rule 2110 and Interpretive Material (“IM”) 1000-1.

FINRA imposed the following sanctions upon Tucker:

  • 2 year suspension in all capacities;
  • Re-qualification as a corporate securities limited representative at the conclusion of his suspension,
  • $2,392.30 in costs.

Moreover, in finding that Tucker’s failure to disclose his two bankruptcies, federal tax lien, and three judgments were willful, and the omitted information was material, FINRA deemed Tucker to be statutorily disqualified, and, accordingly, he cannot become or remain associated with a FINRA member unless the disqualified person’s relief from the statutory disqualification. FINRA Department of Enforcement, Complainant, v. Robert D. Tucker, Respondent (National Adjudicatory Council (“NAC”) Decision, 2007009981201 October 4,2011).

Appeal To The SEC

Appearing pro se before the Securities and Exchange Commission (“SEC”), Tucker sought  review of  FINRA’s decision  In the Matter of the Application of Robert D. Tucker For Review of Disciplinary Action Taken by FINRA(SEC Opinion, Release No. 68210; Admin. Proc. File No. 3-14613 / November 9, 2012).

In characterizing Tucker’s FINRA testimony, the SEC Decision states:

Tucker’s testimony at the hearing was varied and inconsistent. Much of his testimony was inconsistent with the documentary evidence and his earlier sworn testimony. He denied knowledge of and responsibility for the judgments, repeatedly avoided answering direct questions about the federal tax lien and his Form U4 disclosures, and said he disclosed his bankruptcies on some (though not all) of the Forms U4 he submitted. For instance, he claimed that officers from Broadband Capital, GunnAllen, and vFinance advised him not to disclose his bankruptcy filings given that he had not done so in the past. Doing so now, they ostensibly said, would only raise “red flags.” During his summation, he claimed that other unspecified firms received IRS notices, that he discussed with them the liens, and that he was advised against amending his forms (again because filing such amendments would only raise “red flags”). In alluding to these purported discussions with firm officials, Tucker did not explain how they related to his repeated and consistent pattern of false filings at each of eleven firms over a seven-year period. Tucker did concede, however, that he completed two additional Forms U4 after giving his sworn investigative testimony and after receiving FINRA’s complaint, but that he did not disclose the bankruptcies or liens on either.

In deciding to sustain FINRA’s findings and sanctions, the SEC offers us a pointed, blunt, assessment of Tucker and his defenses:

Tucker’s failures to disclose the judgments, bankruptcies, and liens were egregious. Over seven years, Tucker was responsible for eleven false and misleading Forms U4. The multiple and longstanding judgments, bankruptcies, and liens that he failed to disclose involved large dollar amounts and longstanding financial obligations to multiple creditors. They were material reflections on his business judgment and the financial pressures and distractions he continually faced while rendering investment advice. His false and misleading filings egregiously violated the standard of “candor and forthrightness” required of associated persons during the registration process. . .

[T}ucker's persistent attempts to deflect blame onto others and his pattern of hiding and mischaracterizing the underlying events to the firms and even to FINRA during its investigation suggests that he is likely to engage in similar misconduct in the future. This pattern of deflection and misdirection also discredits his claims that he believed disclosure was not required based on discussions with firm officials. Tucker had opportunities to make accurate filings each time he associated with a new member firm but repeatedly chose not to—even after he acknowledged the deficiencies in his past filings. He continued to make false filings long after he claims he submitted amended forms at Schneider and other firms, after FINRA began its investigation, after he represented he would correct his earlier filings, after he gave investigative testimony acknowledging his failures to disclose, and even after FINRA filed its complaint in this case. Like FINRA, we conclude that his explanations and testimony were evasive and contradictory and that they ultimately reveal a disconcerting failure to acknowledge his own responsibility in this matter.

[T]ucker’s attempts to shift blame for his own repeated misconduct cast doubt on his commitment to the high standards of conduct demanded of associated persons and ultimately suggests an opportunistic attitude towards disclosure and compliance. Tucker consistently failed to acknowledge the wrongfulness of his conduct—that he had a duty to respond fully and accurately on each of the Forms U4 that he completed and certified and that others were entitled to rely upon in terms of accuracy and completeness. Here, Tucker’s migration among eleven firms over seven years, and consistent certifications of inaccurate information with each, highlights the difficulty in detecting a representative’s past failures to disclose. Accordingly, we find that suspension and license requalification is an appropriate remedial response.We find these sanctions are also appropriate to encourage other representatives to provide complete and accurate Form U4 disclosures even when “detection of dishonest responses seems unlikely.” They also serve the public interest in “maintain[ing] a high level of business ethics in the securities industry” based on timely, accurate, and complete disclosure to investors. . .

Bill Singer's Comment

Frankly, not all that much for me to say: the comprehensive FINRA and SEC decisions spell it out.

Gaming Wall Street‘s disclosure system is not a new compliance problem but it remains a common one.  Trying to put a spin on what you don’t have to disclose, coming up with strained rationale is an old dodge.  And while this problem often arises among the fringes of the securities industry at lesser and often dubious brokerage firms, the fact is that this practice also occurs at the big boys, be they Merrill Lynch, Morgan Stanley, UBS, Wells Fargo, Goldman Sachs, or the like.  If there’s something that someone would prefer to hide, you can bet that a whole batch of ifs, buts, and you could argues bubble to the surface.

Among the lessons — or warnings — of Tucker is to discern how annoyed the regulators are when a respondent persists in pointing the finger at others and lacks the grace to accept some (if not all) the blame. Although such a show of acceptance of liability may not avoid a finding of violation, expressing the requisite mea culpas can impact the length of suspension or dollars of a fine — and can often be the difference in persuading a regulator that your conduct was unintentional and not willful. Remorse, when it is interpreted by regulators as sincere, can and often does make a difference.



Previous Entries
July 3, 2015
On Sunday July 5th, Greeks will be going to the polls -- at least as of the writing of this column -- and voting whether to accept the terms of the pr... Read On
July 2, 2015
Offered for your consideration today in the Blog is a thought piece. On one side, we have the goose: An individual human being conv... Read On
July 1, 2015
If you're going to promise a Wall Street regulator that you will fix a problem, you better make certain -- in fact, you better make damn cer... Read On
June 30, 2015
In "SEC Commissioner Gallagher Rages Against The Dying Light In Two Dissents" (, June 18, 2015), I noted that:After four years ... Read On
June 30, 2015
Stockbroker, Compliance, Legal, and Regulatory JobsEmployment Page Jobs#wallstreetjobs @brokeandbrokerNOTICE TO EMPLOYERS: Brok... Read On
June 29, 2015
On June 26, 2015, the Financial Industry Regulatory Authority ("FINRA") published this somewhat unusual and intriguing press release:FINRA Supports NA... Read On
June 27, 2015
BREAKING NEWS: Supreme Court Rules On Gay MarriageIn Obergefell et al. v. Hodges, Director, Ohio Department Of Health, et. al (Slip Opinion,... Read On Job Search

Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Morgan Keegan Arbitration Counterclaim Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC Ponzi Affinity Fraud Wachovia Criminal Raymond James Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX FBI Banc of America Pro Se PCAOB 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 Email Netschi Moore Whistleblower Street Sweeper Countrywide Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers SIPC IC3 Scottrade AIG 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 Thain 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 Eligibility RRBDlaw 8210 Appeal Fowler LPL Johnson Cellphone US Airways JPM BrokeandBroker 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 Rule 3050 Away Account Credit Repair PN Advisor Placement Group Fifth Amendment Forex Mortgage Private Placement Moon CGMI Failure to Supervise Merrill Anderson Exam Lee Borrowing Tax Lien Charity Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity Expense Reimbursement FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Deferred Compensation RIA Prison Disclosure NASAA Aguilar FCPA Subway Testimony Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank Hospital Retirement Due Process God HSBC Private Placements Eric Stein Wire Fraud FINOP CCO Compliance Audit Test Examination Cheating Joshua Brown Backstage Wall Street Obstruction of Justice Reuters Retaliation Variable Annuity Arbitraiton Outside Account Options Telephone Wine Series 7 Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud OBA Equity Indexed Annuities EIA Disability 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 AML PST Solicited Unsolicited Congress SRO Password Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement Money Market employment jobs Great Recession Chase Investment Services Arrest Barclays Liens Obamacare Failure To Supervise Apple Time And Price T&P Willfully Husband Letter of Authorization LOA Sexism Debit Card Knight Practice Sale Unfair Competition Signature Judgments Data Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Charge Commodities Fraud Sexist NML Argentina Embezzlement Silver Investor Alert Evidence Judgment Bank Fraud Deceased Bill Singer BrokeAndBroker TSSB OHO Leveraged ETF Mary Jo White Trustee FINRA AWC Motion To Dismiss Frumento Conspiracy 6th Circuit Proctor Commissioner Stein 401(k) Rule 3040 Customer Files Class Action Beneficiary NYAG Schneiderman 11th Circuit Insurance Gallagher White Self Regulation Short Sale Compromise Website Rule 2010 Check TRO Supervision Vacatur Remand SDNY Rule 12206 BrokeAndBroker Bill Singer Piwowar Stifel Rule 1122 Article V signature Confidential Inside Information Reg SP VA Leveraged ETFs Regulation SP Fees Cease And Desist Customer Rule 3270 Rule 3240 Annual Compliance Questionnaire OWB 2Cir Red Flags Payroll Stockbrokers ALJ Cybercrime Loans BrokerCheck Altered Records
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+