This Wall Street Train of Regulation Don't Pull No FINRA Winkers

August 8, 2017

Today's Blog is short.  It's a fairly simple tale of someone takin' what ain't theirs to take and then getting bounced from the biz by FINRA. In discussing this fairly straight-forward FINRA regulatory settlement, Bill Singer, Esq. expresses some dissatisfaction with what comes off as something of a wink by FINRA in the direction of the broker-dealer member firm. It's a wink about an understanding that the affiliate bank wasn't named by name in the published settlement. 

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, John Kenneth Lawrence Glover submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of John Kenneth Lawrence Glover, Respondent (AWC 2017053843401, July 31, 2017).

The AWC asserts that Glover first entered the industry in 2012 and by March 2016 was registered with FINRA member firm Citizens Securities, Inc. The AWC asserts that while registered with Citizens Securities, Inc., Glover was also "a licensed banker at CSI's affiliated bank."  Under the heading of "Relevant Disciplinary History," the AWC asserts that "Glover has no relevant disciplinary history in the securities industry."

Caught With His Drawers Down

The AWC asserts that on the following dates, Glover removed without without authorization the indicated sums from the affiliated bank's cash drawer:
  • December 31, 2016: $535;
  • February 4, 2017: $100;
  • March 4,2017: $100;
  • March 17,2017: $70;
  • March 18, 2017: $30; and
  • March 20, 2017: $700
FINRA deemed the above conduct to constitute conversion and the improper used of the affiliated bank's funds, in violation of FINRA Rule 2010.

Online FINRA BrokerCheck records as of August 8, 2017, under the heading of "Employment Separation After Allegations," assert that Citizens Securities, Inc. "Discharged" Glover on March 31, 2017, based upon allegations that:


In accordance with the terms of the AWC, FINRA imposed upon Glover a Bar from association with any FINRA regulated broker-dealer in any capacity.

Bill Singer's Comment

This FINRA AWC is meticulous in not identifying, by name, the "affiliated bank" of FINRA member firm Citizens Securities, Inc. That's very thoughtful of FINRA not to disclose the name of the bank from which Glover stole $1,535 over a span of six separate dates in 2016 and 2017. I keep on making the point about FINRA's idiocy of not identifying a member firm's affiliated bank in the self-regulatory organization's published regulatory decisions. See, for example, "JP Morgan And FINRA Connect The Dots When It Matters"( Blog, March 17, 2017). I guess I'm going to keep on keeping on with that rant.

In today's regulatory settlement, the lengths to which FINRA goes to hide the name of Citizens Securities, Inc. "affiliated bank" comes off as particularly lame and strained. Pointedly, not a single act cited in the AWC took place at the FINRA member firm broker-dealer. Every bit of conversion victimized the affilated bank's cash drawer and that bank's operations. The funds were stolen from the affiliated bank. The funds were stolen in Glover's "role as a banker," as set forth in those exact words on FINRA's BrokerCheck

According to Citizens Securities, Inc.'s BrokerCheck explanation as to why it had fired Glover: "Mr. Glover was terminated by affiliated bank, Citizens Bank, N.A. . . ." Consequently, FINRA's broker-dealer member firm fired Glover because its affiliated bank fired him because he stole from the bank. As such, c'mon, gimme a break here, how could you not name the name of the affiliated bank under such circumstances? 

If FINRA feels soooooo ill at ease in naming the affiliated bank, then perhaps that suggests that the regulator recognizes that these types of affiliate cases don't necessarily involve FINRA regulatory issues and are a somewhat troubling stretch -- perhaps an over-extension -- of the self-regulatory organization's jurisdiction. No, I'm not defending or excusing Glover's conduct; in fact, good riddance! 

What I am asserting is that FINRA needs to reconsider the protocol of when it hides the name of an affiliated firm. In some cases, perhaps even in most, I understand the motivation is to not name an entity that is not under FINRA's jurisdiction and to not further victimize a company that has been victimized by an associated person of a FINRA member firm. See . . . I'm not dense. I understand the issue. On the other hand, when your efforts to protect serve no purpose other than to engage in what comes off as an absurd game of hide-and-seek because the very facts that you are hiding are either already known or easily discovered, that silliness undermines the integrity of regulation. You start winking your way through the seriousness of Wall Street regulation and, as that famous Wall Street regulator Sister Rosetta Tharpe so wisely warned:

But this train, don't pull no winkers, this train
I said this train don't pull no winkers, this train
no no no no no this train don't pull no winkers . . .

Yeah, I know, you never heard of Sister Rosetta Tharpe. Too bad. On the other hand, you're welcome, now you found her. Catch up on what you missed. It's where Rock 'n Roll began. 


"FINRA Gets One Last Slap In Marine Veteran's Face"( Blog, July 31, 2017)

"Bill Singer Submits Rare FINRA Comment ( Blog, June 1, 2017)