In isolation, any number of acts may not seem to amount to all that big a deal when it comes to violations of in-house compliance policies or industry rules and regulations. A single example of a private securities transaction. An undisclosed civil judgment. A couple of measly tax liens. Just a few bricks -- not a wall. Then again, take a look at the wall and notice that it is, indeed, built by piling on just a few bricks and then a few more and a few more. Today's BrokeAndBroker.com Blog visits a FINRA work-site and we watch the regulators' bricklayers mix the mortar that seals the fate of one registered representative.Case In PointFor 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, Leon Edward Dixon submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Leon Edward Dixon, Respondent (AWC 2016051430401, April 14, 2017).The AWC asserts that Dixon entered the securities industry in 1977, and from 1999 until his September 16, 2016, termination, he was associated with FINRA member firm AXA Advisors, LLC. The AWC asserts that Dixon had no prior disciplinary history with the Securities and Exchange Commission, FINRA, any other self-regulatory organization, or any state securities regulator. Start Me UpThe AWC asserts that during the relevant period from about April 2014 through October 2015, Dixon invested approximately $18,000 in a private start-up company that purportedly offered broadband and telecommunications services. Further, during the relevant period, Dixon allegedly solicited 15 AXA clients, who invested about $181,500 in the start-up. The AWC asserts that Dixon "facilitated those investments, including by assisting the Clients with sending payment checks to the Company." The AWC asserts that Dixon received about $15,000 from the start-up.
SIDE BAR: To be clear, to be very clear: I get it when it comes to Dixon's alleged PST activities. To that extent, I have no issue with the self-regulatory organization's analysis of the cited conduct and its conclusion. On the other hand, c'mon, was it really necessary to get in that one last "facilitation" shot while Dixon is at the bottom of the PST pile? Facilitated those investments, including by assisting the Clients with sending payment checks to the Company? What the hell does that even mean? He gave them a pen to address an envelope? He gave them a free envelope? He addressed the envelope? He put a goddamn stamp on the envelope? At some point, enough is enough. FINRA doesn't need to pull the wings off of all the flies it catches.Wall Street's associated persons are faced with some unique employment, compliance, and regulatory issues when confronted by liens, civil judgments, and bankruptcy. Consequently, it is critical to understand the applicable rules and regulations governing the disclosure of such unpaid obligations. Let's consider a few relevant components of that rule book:
If you opt to settle a finding by FINRA that you were guilty of
I understand that this settlement includes a finding that I willfully omitted to state a material facts on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this these omissions make me subject to a statutory disqualification with respect to association with a member.
All in all, a persuasive and fair FINRA regulatory settlement.