We are nearing that time of year when folks get happy feet and consider moving on to another employer. Some of that is prompted by disappointment with the size of a holiday bonus or the failure to win the promised promotion. Other motivations are a growing unhappiness with an organization's loss of direction and the sense that another year went by without improvement. Whatever has lit a fire under you, please keep in mind that you can't simply do a data dump from your employer's platform to your email or thumb drive. There's whatever is left of the Broker Protocol that may govern some of your freedom of choice; and then there's Reg S-P.
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, Jonathan Layne Heise submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Jonathan Layne Heise, Respondent (AWC 2016050818701, January 4, 2018).
The AWC asserts that Heise entered the securities industry in September 2010 with FINRA member firm Trade-PMR, Inc., where he remained through September 3, 2015. Thereafter, the AWC asserts that Heise was associated with FINRA member firm Cetera Advisor Networks, LLC from November 19, 2017 through September 27, 2016. The AWC asserts that he had no prior disciplinary history.
SIDE BAR: Online FINRA BrokerCheck records as of January 9, 2018, disclose that Heise was first registered in April 2011.
The AWC asserts that during the relevant times, Trade-PMR required its employees to protect the firm's confidential customer information and, as such, Heise was prohibited from reproducing or using such confidential information for any purpose other than conducting firm business. The AWC alleges that in August 2015, in anticipation of transitioning from Trade-PMR to Cetera, Heise emailed an Excel spreadsheet to himself that contained 1,300 account numbers, account holdings, market value, tax identification numbers, and dates of birth. The AWC asserts that Heise's conduct amounted to hi removal of non-public personal customer information from the firm's custody and control without TradePMR's or the customer's knowledge or consent.
The AWC asserts that:
Regulation S-P generally prohibits disclosure of nonpublic personal information about a customer unless the customer receives proper notice and an opportunity to opt out.
Information is considered to be "non-public personal information" if it contains personally identifiable financial intonation about one or more consumers, including: (1) information a consumer provides to a broker-dealer to obtain a financial product or service, (2) information about a consumer resulting from any transaction involving a financial product or service between a broker-dealer and a consumer, or (3) information a broker-dealer otherwise obtains about a consumer in connection with providing a financial product or service to that consumer.
"Non-public personal information" includes names, addresses, telephone and social security numbers, birth dates, and account balances that are derived in whole or in part from information provided to a financial institution by a customer.
FINRA deemed that Heise had improperly removed non-public personal customer information from Trade-PMR, without the knowledge or consent of Trade-PMR or the customers, which caused the firm to violate Regulation S-P, and in doing so, Heise violated FINRA Rule 2010.
Online FINRA BrokerCheck records disclose under the heading "Employment Separation After Allegations," that Cetera Advisor Networks "discharged" Heise on September 27, 2016, based upon allegations that:
PREVIOUS FIRM REPORTED THAT THEY HAVE REASON TO BELIEVE THAT MR. HEISE USED PREVIOUS FIRMS [sic] CLIENT INFORMATION TO CONTACT AND SOLICIT CLIENTS
In accordance with the terms of the AWC, FINRA imposed upon Heise a $5,000 fine and a 15-business-days-suspension from association with any FINRA member in any capacity
Bill Singer's Comment
As today's featured FINRA AWC demonstrates, FINRA is quick to punish registered reps for taking confidential data (as should be the regulator's role) but FINRA is not so quick to review its ponderous and lop-sided rules when it comes to setting out the best practices by which a rep may depart his or her firm in a compliant fashion and in a manner that best serves customers' needs. See: Who Owns The Customer? Open Letter To FINRA Board From Bill Singer Esq (BrokeAndBroker.com Blog, January 8, 2018).