September 28, 2019
When it comes to settling allegations of industry misconduct, the Financial Industry Regulatory Authority often seems in a rush to get something on paper and publish it. In that flurry of activity to get it down in writing and get it signed, what emerges as the final draft isn't always as precise as it should be. Sometimes we need to infer what happened. Sometimes we don't have enough facts to infer and are forced to make our own assumptions, regardless of whether they are well-founded. Sometimes, no matter how often we read and re-read a FINRA settlement document, we are left puzzled by what happened or why certain cited conduct is deemed "misconduct." In a recent FINRA AWC settlement, it seems pretty clear that the registered rep engaged in misconduct -- all the more so because he entered into the settlement and signed off on it. In fact, some of FINRA's allegations make a strong case, however, other allegations don't. For starters, it just can't be a violation for anyone to simply "know" that someone is a corporate director, officer, or employee. Perhaps someone at FINRA might exercise just a tad of quality control before releasing these AWC's for publication?
Jonathan Lucas passed himself off as a Frenchman who had relocated to Las Vegas. He's really a 27-year-old from New Jersey. He also passed himself off as quite the brainiac. He claimed to have a full scholarship, funded by the NSA, to Stevens Institute of Technology, where he majored in applied physics and minored in women's and gender studies -- yes, truly -- and earned a BS in "cyber warfare." In fact, Jonathan never graduated from college. He also claimed to have an angel investor (he didn't); to have a development team in place (identified online as Chris, Rick, and Hank but none of them were real); to have a beta site up and running (nothing that the SEC could find); to have raised $4.5 million (not even close); and to have earmarked proceeds for development (he really spent it on promotion).
A former Raymond James employee alleged, in part, that she had been wrongfully terminated and defamed. A FINRA Arbitration Panel awarded her six-figures in cumulative damages, costs, fees, and sanctions. As to the sanctions, the arbitrators considered slamming Raymond James with a $500,000 sanction for Discovery abuse. See how it all finally played out.
A bank robber is caught red-handed. At trial, his lawyer argues that it wasn't felony bank robbery but merely his client politely requesting that patrons of the bank raise their hands over their heads and simply suggesting that the teller hand over the bank's cash. As idiotic as that seems, consider a recent FINRA regulatory settlement.
Our publisher, Bill Singer, Esq. thinks that a FINRA Arbitration Panel and two federal courts got it right when they ruled in favor of two former Barclays employees, who were relieved of repayment of just shy of $4 million in promissory notes' balances. Unfortunately, Bill detests the lack of content and context in the FINRA Arbitration Decision, and the federal courts didn't seem all that enamored with what was before them for review. Sometimes its about the trip. Sometimes its about the destination. Today's blog highlights a case in which the passengers all got to where they were going, and likely had a great time after they arrived -- on the other hand, on the way, the car ran out of gas, punctured two tires, overheated, lost its air conditioning, and wound up on a four-year detour.