January 15, 2014
Most of us like things clear-cut -- straight and simple with no curves or gray areas. Life, however, is rarely anything like that. In today's BrokeAndBroker Blog we are left to wrestle with another messy life and its impact upon compliance and regulatory considerations.
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, Jesse Chandler Skirvin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jesse Chandler Skirvin, Respondent (AWC 2013036557501, January 6, 2014).
Skirvin was first registered in 2006, and from 2009 through December 3, 2013, he was registered with LPL Financial LLC. The AWC asserts that Skirvin had no prior relevant formal disciplinary history with the Securities and Exchange Commission, any self-regulatory organization or any state securities regulator.
Trying To Work It All Out
On February 19, 2010, the AWC asserts that Skirvin entered into a "compromise" with the bank holding a second mortgage on his primary residence. In furtherance of that compromise, the bank agreed to a waiver of repayment of the remaining $111,000 debt beyond $12,047.12 derived from a short sale of the property.
Also, the AWC asserts that on January 7, 2011, Skirvin entered into another compromise with a creditor through his settlement of $3,176 in credit card debt by paying $1,905.60.
14K. Within the past 10 years:
(1) have you made a compromise with creditors, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition?
(2) based upon events that occurred while you exercised control over it, has an organization made a compromise with creditors, filed a bankruptcy petition or been the subject of an involuntary bankruptcy petition?
(3) based upon events that occurred while you exercised control over it, has a broker or dealer been the subject of an involuntary bankruptcy petition, or had a trustee appointed, or had a direct payment procedure initiated under the Securities Investor Protection Act?
14L. Has a bonding company ever denied, paid out on, or revoked a bond for you?
14M. Do you have any unsatisfied judgments or liens against you?
Not Getting To "YES"
The AWC alleges that it was not until April 1, 2013, when Skirvin amended his Form U4 to disclose the two mortgage and credit card debt compromises. Moreover, in completing LPL's Branch Manager & Financial Advisor Questionnaire ("Questionnaire") in 2011 and 2012, the AWC alleges that Skirvin falsely certified that he had not entered into a settlement or compromise with a creditor during the prior two years.
Paying The Price
FINRA asserted that Skirvin's failure to timely disclose the two compromises with creditors on his Form U4 violated Article 5, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010. In accordance with the terms of the AWC, FINRA imposed upon Skirvin a $5,000 fine and a 30-business-day suspension from association with any FINRA member in any and all capacities.
Bill Singer's Comment
Given the facts as set forth in the AWC, the sanctions in this case seem relatively balanced and fair; however, before you are too quick to jump to conclusions or make inappropriate inferences, note that online FINRA documents as of January 15, 2014, disclose that the $3,176 credit card debt was
CREDIT CARD DEBT THAT LAPSED AFTER ASSUMING COSTS RELATED TO REGISTERED REPRESENTATIVE FATHER WHO HAD A STROKE AND REGISTERED REPRESENTATIVE ASSUMED FINANCIAL RESPONSIBILITIES
Moreover, as to the $111,000 mortgage, online FINRA records disclose that:
THIS IS A SECOND MORTGAGE ON REGISTERED REPRESENTATIVE'S PRIMARY RESIDENCE AFTER HIS FATHER'S STROKE, MEDICAL BILLS AND RELATED COSTS WERE ASSUMED BY REGISTERED REPRESENTATIVE FOR HIS FATHER. A SHORT SALE OF THE PROPERTY WAS THE ONLY VIABLE SOLUTION TO STOPPING THE RISK ON THIS PROPERTY.
READ: Real Estate Short Sale Short Circuits Stockbroker (BrokeAndBroker.com, June 19, 2013)