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.
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, David C. Vanech submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of David C. Vanech, Respondent (FINRA AWC 2016052655301)
The AWC asserts that Vanech was first registered in 2006; and by August 2010, he was registered with FINRA member firm Oppenheimer & Co. The AWC asserts that Vanech "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization."
Now You CE It. Now You Don't
As set forth in part in AWC, during the relevant period between January 2014 and February 2018 [Ed: footnotes omitted]:
Vanech was required to personally complete his assigned Firm Element CE modules and other assigned training throughout the year by certain deadlines set by the Firm. For four CE modules assigned to him by the Firm during the Relevant Period, Vanech requested that his client service associate complete the CE modules on his behalf. For example, Vanech requested that his associate complete a Firm Element CE module regarding compliance requirements for municipal securities dealers, and a module required by the Firm regarding Section 5 of the Securities Act of 1933.
At Vanech's request, his client service associate completed the above-referenced training on his behalf, and Vanech did not complete this training himself.
In 2019, the Firm conducted an internal investigation into whether Vanech's client service associate completed CE modules on his behalf. During this investigation, Vanech admitted his misconduct to the Firm.
In accordance with the terms of the AWC, FINRA imposed upon David C. Vanech a $3,000 fine; a 3-month suspension from any FINRA member firm in any capacity; and a requirement to attend and complete 10 hours of Continuing Education within 60 days.
Bill Singer's Comment
Every two years I'm required to take some 24 hours of continuing education as a lawyer. Much of my time is wasted on well-intentioned but ridiculous mandatory ethics/diversity training. Some things you just can't teach. Some things don't require repeating every two years. Either you are ethical or you're not. Either you appreciate the need for diversity in our society or you don't. In my excperience, unethical bigots don't become ethical righteous citizens after being forced to listen to a one-hour video. Similarly, many of the available legal CE courses are billed as one thing but are presented as something else -- and that "else" often wastes my time. Regardless, I am a proponent of legal CE, and I use the required time to brush up on many legal developments and trends. Pointedly, I personally put in all the hours necessary for compliance (even if I grouse about it endlessly!)
Not Bank Robbery
No . . . Vanech didn't engage in bank robbery. And, no, I'm not going pretend that anyone on Wall Street is enamored with continuing education or even takes it seriously. Frankly, much of what parades about as Wall Street CE is a waste of time. Consequently, there will be many industry participants who are sympathetic to Vanech and will excuse his behavior for what it is. That doesn't make his conduct right or even excusable. It simply offers an insight.
Nothing More Than A "Request"
So, putting aside the value of CE, lost in the Vanech AWC is the seriousness of his misconduct. Pointedly, the AWC alleges that Vanech apparently "requested that his client service associate complete the CE modules on his behalf" in 2014, 2015, 2016, 2017, and 2018 -- yeah, odd how it's not so funny when you set out the array of years in which Vanech didn't actually complete his own CE. It's also not so funny when you note that it was only in 2019 that Oppenheimer discovered the charade. Even less amusing is FINRA's bizarre characterization of Vanech's misconduct: "requested that his client service associate complete the CE modules . . ."
Without any intention of being sexist here, I want to note that much of my annoyance with FINRA's flippant characterization of these CE matters revolves around the fact that the majority of so-called "client service associates," tend to be women. As in salaried employees. As in dependent upon the good will and benevolence of the registered men to whom they are often assigned. As in routinely being placed in the role of the "office girl," and being continually reminded that they're part of a team (although not commissioned) and how teamwork is expected of all team players (as in, you should generally do what the guys tell you, even if it's not in compliance with firm or industry rules) and how those who go along, get along and get bonuses and modest salary increase and as in those who say "no" often get lousy performance reviews and soon find their way off the team. In the event that Vanech's "client service associate" is not a woman, then I apologize for the inference. Notwithstanding, there is still something inappropriate when a superior "requests" that a subordinate complete CE requirements.
Given the sexual politics on Wall Street and in Wall Street's branch offices, FINRA should see the bigger picture. It's shameful that Vanech's misconduct is largely fluffed off by the self-regulatory-organization as "Vanech requested that his client service associate complete the CE modules on his behalf . . ." or that "Vanech requested that his associate complete a Firm Element CE module . . ." Request? The overwhelming majority of these CE case involve superiors (frequently male) "permitting" or "requesting" their underlings (frequently women) to take the CE modules for them. The practice is far more widespread than the industry would like you to think -- and certainly FINRA doesn't add any gravitas to the issue with its ill-considered characterization. For a similar take on the same underlying conduct, read: "Epic Rant About A Tepid FINRA Regulatory Settlement" (BrokeAndBroker.com Blog / January 31, 2018). http://www.brokeandbroker.com/3799/finra-continuing-ed/
Finally, I note the irony of the disclosure under the heading "Other Business Activities" on Vanech's online FINRA BrokerCheck record as of September 24, 2019, that:
PROVIDENCE AFTER SCHOOL ALLIANCE - PASA
81 CARPENTER STREET
PROVIDENCE, RI 08903
PASA'S MISSION IS TO EXPAND AND IMPORVE [sic] QUALITY AFTER-SCHOOL SUMMER AND OTHER EXPANDED LEARNING OPPORTUNITIES FOR THE YOUTH OF PROVIDENCE. I AM A COMMITTEE MEMBER EFFECTIVE 4/18. I SPEND ONE HOUR A MONTH BEFORE OR AFTER MARKET HOURS.