Stockbroker Jumps The Gun As Continuing Ed Snags U4

May 7, 2014

I offer this brief AWC in order to remind all registered persons of the need to remain current with your continuing education obligations.  Also, take note that the mere filing of your Form U4 is not a "good to sell" date and you should hold off on registered activities until that status is confirmed, preferably in writing. Although many of us bemoan the merits of the CE program as little more than a public relations ploy designed to give the appearance to the public and industry critics of ongoing education, the requirements are in FINRA's rulebook and non-compliance is not without its risks. 

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, Alan David Peck submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Alan David Peck, Respondent (AWC 2013035565001, April 28, 2014).

In 1994, Peck entered the securities industry  and was registered with three FINRA member firms until February 2011; thereafter, on May 22, 2012, Peck joined 79 Capital Securities, LLC and in July 2012 became registered with that firm, where he remained until May 31, 2013. 

Now You CE Me, Now You Don't

Although 79 Capital filed a Uniform Application for Securities Industry Registration or Transfer ('Form U4") in order to register Peck, the approval was delayed because Peck had some continuing education ("CE") deficiencies. The AWC asserts that his registration did not become effective until July 6, 2012. 

FINRA alleges that on or about May 23, 2012, Peck sold $250,000 worth of securities to two 79 Capital customers at a time when he was not registered, constituting a violation of NASD Rule 1031 and FINRA Rule 2010.

In accordance with the terms of the AWC, FINRA imposed upon Peck a $5,000 fine and a 15-business-days suspension in all capacities.

Bill Singer's Comment

Six weeks elapsed between the May 22nd filing of Peck's Form U4 and the July 6th notice of the effectiveness of his registration.  Apparently, FINRA has made a big deal about the fact that during said lapse, Peck entered into some securities transaction for two customers on one day -- and to be clear, to be very clear, I fully understand and respect why the regulator's concern is pressing and valid. It is critical that registered activities are only undertaken by registered individuals. I get it.

What I don't get is why FINRA premised this AWC on conduct that occured during a time when the Form U4 had been filed and was awaiting approval (albeit on behalf of an individual with purportedly non-compliant CE), but the AWC fails to answer the following:
  • Did someone at the brokerage firm give Peck the go-ahead to begin selling after the U4 filing but before its approval?
  • Did FINRA notify Peck and/or 29 Capital Securities of any concerns or problems with his application prior to the approval date?  
  • Were the cited CE deficiencies technical in nature, errors attributable to a member firm, errors solely attributable to Peck, inadvertent failures, or a lack of timely satisfaction of course attendance? 
  • Did the firm's registration department detect the premature sales and bust the trades?
Notwithstanding the short and not-so-sweet nature of this AWC, it's puzzling as to why FINRA would impose thousands of dollars in fines and just shy of a month's suspension on Peck but fail to specify what constituted his "continuing education deficiencies." 

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