July 15, 2013
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, George Bussanich submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of George Bussanich, Respondent (AWC 2012031107102, July 5, 2013).
Bussanich was first registered in 2004 and joined FINRA member firm Kovack Securities, Inc. in 2006, where he remained until his December 31, 2011 termination.
On October 18, 2011, during a routine branch audit, Kovack Securities discovered that since 206, Bussanich had been working for and was compensated by his father's physical therapy business - a fact that Bussanich is characterized as having admitted. Moreover, Bussanich allegedly failed to disclose on Kovack Securities' annual compliance attestations from 2010 and 2011 his outside business activities. During the times relevant to this matter, the firm's written supervisory procedures required prior disclosure and firm approval for any outside business activity. FINRA deemed Bussanich's conduct to constitute violations of NASD Rules 3030 (for misconduct before December 15, 2010) and 2110 (for misconduct before December 15, 2008) and FINRA Rules 3270 (for misconduct beginning December 15, 2010) and 2010 (for misconduct beginning December 15, 2008).
In accordance with the terms of the AWC, FINRA imposed upon Bussanich a $5,000 fine and a 30-day suspension from the industry in all capacities.
Bill Singer's Comment
Okay, yeah -- I get it. Bussanich engaged in an outside business activity. The old OBA violation. On the other hand, these OBA cases can run the gamut from the sublime to the ridiculous and, frankly, this case seems to have moved the needle more to the latter end of the dial.
Before y'all come down on me like a ton of bricks, please keep in mind that I have frequently written about these violations and, more often than not, I concur with the charges and sanctions. In Bussanich, not only did the respondent fail to notify his firm of his OBA but, also, he repeatedly lied about the activity on his annual certifications. That compounded his problems.
Notwithstanding, there are some cases that force me to roll my eyes and wonder if it truly isn't time to re-visit the whole OBA issue and rewrite the rules to better reflect the realities of Wall Street these days. For starters, there are a lot of registered representatives who simply cannot make ends meet as a stockbroker -- their market is too small, business is soft, and then there's the unfortunate fact that some folks just can't cut it.
Consequently, in addition to a whole bunch of so-called under-employed folks in the overall economy, Wall Street has a cadre of registered folks who are compelled to seek second jobs in order to pay their bills. Over the years, I have spoken to industry employees who have run afoul of the OBA rule for reasons that I find silly: they were delivering pizza on weekends, they were driving limos after hours, etc. In many of those situations, there was little, if any, liability exposure to the FINRA member firm.
Should industry employees be expected to follow the rules? Absolutely. Should they notify their firms when seeking outside employment? Yes -- as a lawyer I understand the potential abuse and problems those second and third jobs pose to FINRA member firms. Given the number of these cases that wind up with violations resulting in suspensions and fines, however, perhaps it's time to consider carving out some reasonable exceptions on behalf of registered reps. For starters, let's just consider what potential exposure a FINRA brokerage firm has if one of its stockbrokers is giving deep muscle massages or another employee is delivering pizza on Friday and Saturday nights.
Finally, someone want to explain to me how Kovack Securities uncovered Bussanich's OBA in October 2011, fired him in December 2011, and FINRA is only now getting around to settling this case? I mean, c'mon, the AWC makes a point that Bussanich admitted to the infractions. What the hell took 19 months from the date of his termination for FINRA to get around resolving its issues with Bussanich?
David Sobel, Esq., FINRA's Small Firm Advisory Board Chair, discusses with Bill Singer, Esq. the struggle of small broker dealers. Can the partnership of regulator and regulated be restored?.