December 23, 2013
If nothing else, Wall Street is a boulevard of short-cuts -- some legal, some clever, but many of them are detours into areas of illegality and misconduct. Today's BrokeAndBroker Blog is about a minor failure to follow the rules but, nonetheless, a shortcoming that resulted in a fine and suspension.
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, Jason Goldstein submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jason Goldstein, Respondent (AWC 2012033318101, December 11, 2013).
In 2006, Goldstein first became registered and during the relevant time from 2010 through July 7, 2012, he was registered with Deutsche Bank Securities Inc. ("DBSI"). The AWC asserts that Goldstein had no prior relevant disciplinary history with the Securities and Exchange Commission, FINRA, any other self-regulatory organization or any state securities regulator.
DBSI required its employees to complete an annual on-line internal training program in professional conduct; and, accordingly, in May 2010, Goldstein was notified that he was scheduled to complete certain courses.
SIDE BAR (Sarcasm Alert!): Okay, so, let's just to a brief re-cap. DBSI has an internal training program, which includes a "professional conduct" module. Employees subject to this training are required to personally take the online courses. Now, let's think about this -- not too long but just for a moment. You got a Wall Street firm. You got internal training. You got an online course in professional conduct. My oh my, now just what could possibly go wrong with all of that? I mean, you know, can you think of any short cuts that someone might take to circumvent the requirement to personally take such a course?
Do Me A Favor
The AWC alleges that around May 14, 2010, Goldstein requested his sales assistant to take some of the online courses for him and, in fact, facilitated that ruse by providing the assistant with his online password. Thereafter, in May and June 2010, the sales assistant logged onto DBSI's system posing as Goldstein and completed two courses.
According to online FINRA documents as of December 23, 2013, DBSI "Discharged" Goldstein on June 18, 2012 based upon these allegations:
THE INTERNAL REVIEW FOCUSED ON REQUESTING, AND INSTRUCTING A SUBORDINATE TO REQUEST, THAT A THIRD PARTY PROVIDER OF ACCOUNT STATEMENTS USE THE PURCHASE PRICE OF CERTAIN BONDS RATHER THAN THE MARKET PRICE OF VARIOUS MONTHLY ACCOUNT STATEMENT [sic]. THE REVIEW ALSO DETERMINED THAT MR. GOLDSTEIN SENT AN EXCEL SPREADSHEET TO A CLIENT THAT CONTAINED MARKET VALUES THAT DIFFERED FROM THE FIRM'S OFFICIAL STATEMENTS ADDITIONALLY, THE FIRM DETERMINED THAT MR. GOLDSTEIN CAUSED CLIENTS WITH NON-DISCRETIONARY ACCOUNTS TO BELIEVE THAT HE WAS AUTHORIZED TO EXERCISE DISCRETION IN THEIR ACCOUNTS. FINALLY, THE FIRM DETERMINED THAT MR. GOLDSTEIN SENT ANOTHER EMPLOYEE HIS PASSWORD AND INSTRUCTED THAT EMPLOYEE TO COMPLETE REQUIRED ONLINE DEUTSCHE BANK COMPLIANCE TRAINING COURSES ON HIS BEHALF. THESE ACTIVITIES VIOLATED FIRM POLICY.
The AWC asserts that Goldstein's misconduct constituted a failure to observe high standards of commercial honor and just and equitable principles of trade in violation of FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Goldstein a $5,000 fine and a 20-business-day suspension from association with any FINRA member firm in any and all capacities.
Bill Singer's Comment
Oh my, such a silly bit of, what should we call it, laziness? Instead of doing the grunt work, logging in on his own, and taking the damn course, Goldstein sought a short-cut, but it came with the relatively hefty price-tag of a $5,000 fine and a suspension. FINRA is on solid footing with this case.