There's poetic license and there's your driver's license. Of course, we all know folks who sort of take liberties at the MVA with facts such as whether they really, really, really need glasses to drive. We also know folks who may add just a teeny, tiny inch or so to their height when filling out the renewal form. Then there are those who simply aren't willing to go under the knife for plastic surgery and prefer to estimate the year of their birth. Not that it's a good thing to lie on your driver's license but, hell, it's not a good thing when they send you to the window under the green light to pay the fee and after about 20 minutes waiting on that line, the MVA employee closes the window for a break and sends you to the line behind the other green light where they won't take you next even though you were waiting for, what is now, like 30 minutes, and then they start in with the thing about lowering your voice, and then it's I'm done talking to you, and if you don't move away from my closed window, I'm calling security, to which, the guy waiting on line who is now red in the face and with trembling hands says to the security guard, yeah, go ahead, put your hands on me again and I'll show you what I'll do with that green light! But, okay, sure, let's not get into that whole MVA line-thing now because today's BrokeAndBroker.com Blog is about the consequences faced by a stockbroker who lied about her date of birth on her driver's license.
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, Lisbeth Lovell Cherrington submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Lisbeth Lovell Cherrington Respondent (AWC 2016051424001, August 24, 2018).
In 1990, Cherrington was first registered; and, thereafter, she was registered with FINRA member firms as follows:
September 2002 to November 2011:Wells Fargo Clearing Services, LLC;
November 2011 to January 2014: Morgan Stanley; and
January 31, 2014: FSC Securities Corporation.
The Dating Game
In June 2010 and July 2011, Cherrington obtained a driver's license with a false date of birth.
In July 2011, Cherrington provided the false date of birth (apparently the same as on her driver's license) to Wells Fargo for the purposes of updating her personal brokerage account records.
In November 2011, Cherrington provided the false date of birth on various employment, regulatory, and personal brokerage accounts documents attendant to her joining Morgan Stanley.
In January 2014, when completing her new hire package at FSC, Cherrington used the false date of birth on various documents, among which were a fingerprint card used to conduct her background check, and account opening documents for her personal brokerage accounts. Also, Cherrington knew that the Uniform Application for Securities Industry Registration or Transfer ("Form U4") filed on her behalf by FSC contained the false birth date.
At some point and for reasons that are not set forth in the AWC, FSC began an internal investigation. During that investigation, the AWC asserts that Cherrington told the firm that her documents reflected the wrong date of birth because:
"someone" provided it and that the driver's license was inaccurate because of her lack of oversight when it automatically renewed. However, Cherrington knew that she personally obtained a driver's license with a false date of birth, and provided copies of and/or access to that driver's license to her firm employer and office personnel for business purposes. Cherrington also knew that her responses were false and misleading.
At some point during her employment with FSC, Cherrington also used the false employment date on a variable annuity policy change of ownership forms and June 2016 life insurance application that was withdrawn.
As finalized on December 23, 2016, in lieu of the South Carolina Department of Insurance ("SCDOI") seeking to revoke her authority, Cherrington entered into a Consent Order, waived her right to a public hearing, and agreed to pay a $2,000 administrative fine. In the Matter of Lisbeth L. Cherrington (Consent Order Imposing Administrative Fine; State of South Carolina Department of Insurance; SCDOI File Number 16-5296 / December 23, 2016) http://brokeandbroker.com/PDF/CherringtonSCDOIOrder.pdf . The Consent Order addressed allegations that:
Lisbeth L. Cherrington violated the laws of this state and was in violation of Section 38-43-130 when she renewed her license application four times with an incorrect date of birth
In summing up its charges, FINRA states in the AWC that:
During the period of July 2011 through August 2016 (the "Relevant Period"), Cherrington
provided a false date of birth to three member-firm employers on various internal
documents relating to her employment applications, personal brokerage accounts records,
and investments. By doing so, Cherrington caused her three member-firm employers to
maintain inaccurate books and records, in violation of NASD Rule 3110(a) (for conduct
occurring before December 5, 2011), FINRA Rule 4511 (for conduct occurring on or after
December 5, 2011) and FINRA Rule 2010.
When Cherrington became associated with FSC in January 2014, she also filed an Uniform
Application for Securities Industry Registration or Transfer ("Form U4") using the false
date of birth, in violation of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules
1122 and 2010.
Cherrington also provided misleading information to FSC during the course of its internal
investigation, in violation of FINRA Rule 2010.
In accordance with the terms of the AWC, FINRA imposed upon Cherrington a $15,000 fine and a two month suspension from association with any FINRA member firm in any capacity. Further, the AWC includes this provision:
I understand that this settlement includes a finding that I willfully misrepresented a material fact 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 misrepresentation makes me subject to a statutory disqualification with respect to association with a member.
Bill Singer's Comment
Let's step back a second and ask ourselves just what's really going on here. We got a lowly registered rep being fined $15,000, suspended for two months, and, effectively barred from the industry a la a statutory disqualification for making a "willful misrepresentation" concerning her date of birth. In the scheme of things, it initially comes off as an eye-roller and a shrug -- like, really, who cares? Folks lie about all sorts of things such as their age, education, military service, job experience, ethnicity, and the like. Not saying it's okay but just offering a bit of perspective. As a very stable genius's lawyer recently said: Truth isn't truth. Which would prompt the corollary that lying isn't lying.
More to the point, given the whoppers that many large banks and broker-dealers have told in recent years, and the serious harm that such lies caused. how it is that FINRA is all in a lather when some lowly stockbroker lies about her age? Remind me just exactly what action FINRA took against its large member firms when they lied in their financials or to regulators or to Congress? Oh, and while we're strolling down Wall Street's regulatory lane, you are aware the even when a big financial institution does wrong that the SEC can barely wait for the ink to dry on the settlement before granting an exemption from any serious consequences. I mean, seriously, is it truly worse to lie about the year of your birth than whether millions of customers authorized you to open accounts in their names? And spare me the two-wrongs-don't-make-a-right crap -- on Wall Street, wrongs often make lots and lots of moolah for the big boys notwithstanding whatever tepid regulatory sanctions may be involved.
Stepping down from my soap-box and wallowing in the more mundane, the puzzling aspect of FINRA's Cherrington AWC is the number of unanswered questions:
Why did Cherrington lie about her age on her driver's license?
Did the state that issued her license revoke it or file criminal charges against her?
Why did Cherrington lie about her age on so many documents over the last several years? Was it simply vanity about her age or a more ominous reason?
What prompted FSC to initiate an internal investigation of Cherrington, and, similarly, what caught the attention of the State of South Carolina?