Female Completed Continuing Ed for Male Supervisor

May 9, 2016

To say that a recent FINRA regulatory settlement - or two settlements, to be precise - perplexes me would be a gross understatement. All of which prompted today's BrokeAndBroker.com Blog, which you may call a diatribe, jeremiad, tirade, or angry critique. However you view my commentary, consider the facts for yourself and feel free to draw your own conclusions.

First Case In Point

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, Jennifer Rose Montgomery submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jennifer Rose Montgomery, Respondent (AWC  2015045341702, May 2, 2016).

The AWC asserts that Jennifer Montgomery entered the industry in 2011 and was registered with Northwestern Mutual Investment Services, LLC ("NM"), where she remained until March 2015. The AWC states that Jennifer Montgomery had no prior history of discipline by FINRA, the Securities and Exchange Commission, any other self-regulatory organization, or any state securities regulator.

Unsatisfied Continuing Ed

In an excess of fairness to FINRA, I offer a verbatim quote from the relevant portion of the Jennifer Montgomery AWC:

FACTS AND VIOLATIVE CONDUCT

In December 2014, NM notified Montgomery's supervisor that he had not satisfied certain continuing education requirements. Using a password that her supervisor had given her, Montgomery registered for and completed the necessary coursework on her supervisor's behalf.

As a result, Montgomery failed to observe high standards of commercial honor, violating FINRA Rule 2010.

FINRA Sanctions

In accordance with the terms of the AWC, FINRA imposed upon Jennifer Montgomery a $5,000 fine and a 20-business-day suspension from association with any FINRA broker-dealer in any capacity.

Bill Singer's Comment

Jennifer Montgomery's supervisor was notified that he had not satisfied certain continuing education requirements; thereafter, Jennifer Montgomery used her supervisor's password and completed the necessary coursework. And just who is this supervisor? He is not named in the Jennifer Montgomery AWC but is solely referenced by FINRA as "Montgomery's supervisor" or "her supervisor" (as noted in the quote above).

Now, you tell me, what do you imagine went on here . . . as in, you know, really went on?  I'm not asking you to overly exercise your imagination. I'm asking that you use whatever industry experience you have coupled with whatever life experience you have and try to fill in the void in the AWC. I'm not saying that the Jennifer Montgomery AWC isn't accurate. What I am saying, however, is that there seems to be something missing between Point A: when her supervisor learns that he had not satisfied his continuing education requirements; and Point C: when Jennifer Montgomery took it upon herself to complete her supervisor's coursework. Point B is the whole motivation thing -- the "why" did she do it.

In Bill Singer's imagination, maybe the supervisor paid Jennifer Montgomery to take the coursework; or, maybe the supervisor made a veiled threat to Jennifer Montgomery that if she didn't do the missing coursework her job or compensation might suffer; or, maybe Jennifer Montgomery liked the supervisor (as in "liked" or as in "liked like") and, as such, was more than happy to help him out; or, maybe Jennifer Montgomery asked to be paid to take the missing coursework; or, finally, maybe Jennifer Montgomery was a good soul and went the extra mile to help her supervisor.  Obviously there's no basis for any of my musings other than an active imagination and a lack of content and context in the Jennifer Montgomery AWC.  FINRA's invitation to you and me to "fill in the blanks" is a disservice to the respondent, the industry, and the investing public. It is hide-and-seek regulation at its worst.

My curiosity, having been piqued, by way of extra credit, I looked up Jennifer Montgomery's online FINRA BrokerCheck record and found that she had voluntarily resigned from NMIS on March 31, 2015. The BrokerCheck record further notes that:

SUBSEQUENT TO HER TERMINATION, FORMER REPRESENTATIVE PROVIDED SIGNED STATEMENT IN WHICH SHE ADMITTED TO COMPLETING ONE CONTINUING EDUCATION COURSE ON HER EMPLOYER/REPRESENTATIVE'S BEHALF BUT DENIED THAT HE ASKED HER OR DIRECTED HER TO DO SO.

We learn for the first time from BrokerCheck (as it is not stated in the Jennifer Montgomery AWC) that her supervisor was her "employer/representative" --, not merely, her "supervisor" but, more relevant, also her "employer." Further, the BrokerCheck record notes that Jennifer Montgomery denied that her employer/representative/supervisor had "asked her or directed her" to complete his coursework.

For the life of me, I can't understand why the Jennifer Montgomery AWC failed to disclose that her supervisor was also her employer. Similarly, the Jennifer Montgomery AWC painfully silent as to her motivation in taking her supervisor's coursework and simply presents her as having used his password and completed the task; however, the BrokerCheck record asserts that she denied that her supervisor asked or directed her to engage in the violation at issue -- which leaves us with the inference that she took the coursework on her own volition. Maybe that latter point isn't earth shattering but you would sort of think that FINRA would have at least spelled out that factor in the Jennifer Montgomery AWC, if for no other reason than to dispel and implication that the supervisor had strong-armed his subordinate or implored her to finish the continuing education requirement.

Second Case In Point

Why have I made such a big deal about the undisclosed background of Jennifer Montgomery's supervisor and her motivation in engaging in the cited misconduct? Perhaps what follows will better explain my role as agent provocateur.

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, Jordan Michael Montgomery submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jordan Michael Montgomery, Respondent (AWC  2015045341701, May 2, 2016).

SIDE BAR:Did you notice that the Jennifer Montgomery AWC was #2015045341702 and the Jordan Montgomery AWC is #2015045341701 -- as in sequential?  And "no", neither AWC is referenced by name or number in the other!

The Jordan Montgomery AWC asserts that he had entered the industry in 2010 and was registered with Northwestern Mutual Investment Services, LLC ("NM") as both a registered representative and principal, where she remained until March 2015. The AWC states that Jordan Montgomery had no prior history of discipline by FINRA, the Securities and Exchange Commission, any other self-regulatory organization, or any state securities regulator.

Unsatisfied Continuing Ed

In an excess of fairness to FINRA, I offer a verbatim quote from the relevant portion of the Jordan Montgomery AWC:

FACTS AND VIOLATIVE CONDUCT

In December 2014, NM notified Montgomery that he had not satisfied certain continuing education requirements. Montgomery did not complete the necessary coursework, yet later that month he received notice that the requirements had been satisfied. Montgomery learned that his assistant had registered for and completed certain coursework on Montgomery's behalf, using a password that he had provided, in violation of NM's policies. However, at that time Montgomery did not take the coursework himself, report his assistant's conduct, or take any other corrective action.

As a result, Montgomery failed to observe high standards of commercial honor, violating FINRA Rule 2010.

FINRA Sanctions

In accordance with the terms of the AWC, FINRA imposed upon Jordan Montgomery a $5,000 fine and a 20-business-day suspension from association with any FINRA broker-dealer in any capacity.

Bill Singer's Comment

By way of extra credit, I looked up Jordan Montgomery's online FINRA BrokerCheck record and found that NM characterized his termination as a "Permitted to Resign" on March 31, 2015. The BrokerCheck record further notes that the termination was based upon allegations that :

REPRESENTATIVE WAS PERMITTED TO RESIGN AFTER ALLEGATIONS WERE MADE INCLUDING THAT: HE FAILED TO REPORT THAT HIS ASSISTANT TOOK ON-LINE CONTINUING EDUCATION COURSES FOR HIM; AND, THAT REPRESENTATIVE ASKED HIS THEN-ASSISTANT TO PURCHASE TWO NON-VARIABLE POLICIES ON HERSELF AND HER HUSBAND AND THAT HE THEN REIMBURSED THE PREMIUMS TO THE ASSISTANT. REPRESENTATIVE DENIES HE REIMBURSED THE PREMIUMS TO HIS THEN-ASSISTANT AND STATED THE PAYMENT WAS A PRODUCTION BONUS. THE FIRM IS CURRENTLY CONDUCTING AN INTERNAL REVIEW OF THESE MATTERS.

Ummm . . . you want to say it or should I?

What the hell are we to make of the fact that both Jordan and Jennifer have the same last name? Apparently, Jordan is not Jennifer's husband because his BrokerCheck report refers to Jennifer "and her husband" as the purchasers of two policies. Nonetheless, are Jennifer and Jordan brother and sister, cousins, or some other family members? Is Jennifer married to Jordan's brother or some other Montgomery family member? Or is it all just a coincidence about the same last names?

Also, what are we to make of Jordan Montgomery's BrokerCheck report reference to that oddball purchase of two non-variable policies with the subsequent premium reimbursement a la production bonus? Why did no mention of that transaction find its way into either of the AWCs under consideration? Did FINRA reach any conclusion as to whether there was a payment made from Jordan to Jennifer?

Similarly, some 14 months ago, NM permitted Jordan to resign in March 2015. Did the FINRA member firm get past its 2015 stage of "currently conducting an internal review of these matters," as asserted in Jordan's BrokerCheck report? What, if any, conclusion did the firm reach?

Jordan is not Jennifer's husband but are Jennifer and Jordan brother and sister, cousins, or some other family members? Is Jennifer married to Jordan's brother or some other Montgomery family member? Or is it all just a coincidence about the same last names?

In the end we have two AWCs addressing the same underlying act of misconduct but neither AWC references the other.Left unstated and unresolved is why Jennifer completed Jordan's coursework or whether there was any compensation or other consideration paid for that "voluntary" act.  Sadly, there is not much substance in either AWC and we are left searching for explanations to explain not only what happened but why Jennifer and Jordan both received the same sanction. As today's blog title laments, about the only takeaway that FINRA offers in these two settlements is that a "Female Completed Continuing Ed for Male Supervisor." Could you just give us something to explain what happened here?

Just give me one thing that I can hold onto: