October 4, 2019
If you engage in misconduct and it comes to FINRA's attention, the self-regulatory process seems designed to elicit (some might say "force") a settlement. The bigger the FINRA member firm, the less likely a contested hearing -- in essence, the big boys go to the Green Light, wait their turn, pay the fine, and get back to work. If necessary, repeat for each successive violation; see, for example: "FINRA Fines UBS Financial Services Inc. $2 Million for Continued Failures Relating to Short Positions in Municipal Securities / Firm Inaccurately Represented the Tax Status of Thousands of Interest Payments to Customers; Restitution Ordered "(FINRA Release / October 2, 2019) as reported at http://www.rrbdlaw.com/4831/securities-industry-commentator/#ubs More likely than not, the little guy writes out a check but also gets sent to the penalty box. Where they sit until they make their way back onto the ice, eager to knock someone down in retribution. Frankly, none of the fines and sit-downs change behavior or educate. It's just a matter of re-filling the balance on your transit card and swiping. Self regulation ain't all that inspired when it comes to addressing misconduct. The approach is viewed by those who work the system as the cost-of-doing-business. Now that I got that out of my system, let's turn to 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, Brian D. Parker submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Brian D. Parker, Respondent (FINRA AWC 2016052655301)
The AWC alleges that Parker was first registered in 1991, and between September 105 and October 2017, he was registered with FINRA member firm USA Financial.
2011 Suspension and Fine
Under "Relevant Disciplinary History," the AWC alleges that:
Impersonation by Assistant
On May 4, 2011, FINRA accepted a Letter of Acceptance, Waiver and Consent (AWC
No. 2008011572901) in which Parker consented to the entry of findings that he violated
FINRA Rule 2010 and NASD Rules 2110, 3030, and 3050, by failing to provide prompt
written notices of both his outside business activities, and his outside securities account,
which he held at another FINRA broker-dealer. Parker was suspended for thirty days in
all capacities and fined $5,000.
The AWC alleges that in August 2017, Parker's customer "MP" requested a change of the designated beneficiary on an insurance policy that the customer held directly with the issuer. As alleged in part in the AWC:
[I]n order to
obtain MP's policy information and the form that would need to be completed to change
the beneficiary designation, Parker directed his assistant to obtain that information by
impersonating the customer. Specifically, Parker instructed the assistant to have all of
MP's personal confidential information in front of her, including MP's birthdate, social
security number and address, and to explicitly misrepresent to the insurance carrier that
she was MP. While Parker was obtaining this information as an accommodation to MP,
he explicitly instructed his assistant to "get around" the insurance company's privacy
policies by pretending to be MP. At Parker's direction his assistant carried out his
The AWC alleges that on July 26, 2017, Parker's customer "DM" signed an equity indexed annuity application, which was rejected as incomplete by USA Financial on August 3, 2017, because the document had been transmitted with an incomplete "Fixed Indexed Annuity Acknowledgment" and was lacking the requisite customer suitability form. On August 4th, Parker met with DM to secure the two missing documents; unfortunately, after the customer left, it was discovered that DM had failed to initial the suitability form. At that point, the AWC alleges that:
[A]fter discussing this omission with DM, Parker initialed the form for him,
as DM had requested.
Prior to re-submitting the new application and the newly-completed and executed forms
to the Firm, Parker could not locate the newly-completed Transfer of Assets form. Parker
did not discuss this missing form with DM and did not have DM complete and execute a
new Transfer of Assets form. Instead, Parker completed a new Transfer of Assets form
himself. He then attached the signature page from DM's earlier, rejected application.
After attaching the previously executed signature page to the Transfer of Assets form,
Parker directed his assistant to submit the forms for processing. No assets were
transferred against DM's direction.
PTR and Discharge
Online FINRA BrokerCheck records as of October 4, 2019, disclose that Parker was "permitted to resign" on January 14, 2011, by FINRA member firm Park Avenue Securities LLC based upon allegations that:
MR. PARKER'S REGISTRATION WAS TERMINATED AFTER VIOLATIONS OF FIRM POLICIES AND PROCEDURES REGARDING OUTSIDE BUSINESS ACTIVITIES AND OUTSIDE SECURITIES ACCOUNTS WERE UNCOVERED DURING THE COURSE OF A FINRA INVESTIGATION.
Also, BrokerCheck records disclose that Parker was "discharged" on October 13, 2017, by FINRA member firm USA Financial Securities Corporation based upon allegations that:
Failure to comply with firm policies and procedures by initialing account-related documents on behalf of a client (subsequently, Mr. Parker submitted documents showing that the client gave him permission and that he did it as an accommodation).
FINRA deemed Parker's cited misconduct as in violation of FINRA Rule 2010; and, in accordance with the terms of the AWC, the self-regulator imposed upon Parker a $10,000 fine and a four-month suspension from associating with any FINRA member in any capacity.
Bill Singer's Comment
Frankly, I'm not quite sure what FINRA was thinking here with what comes off as a very. very charitable four-month suspension. Yes -- I fully appreciate that the MP incident could (should) be viewed from the prism of misguided customer service. And, yes, I do acknowledge that customer MP had requested the change of beneficiary. Moreover, there was no financial detriment sustained by anyone as a result of Parker's misconduct. Similarly, the DM incident was a relatively minor matter prompted by the customer's failure to initial a document. I get it. I'm being as charitable and fair here as the circumstances require. It's not the crime of the century. I'm not pretending it is. On the other hand, the AWC does not seem to take into account that in 2011, FINRA had fined and suspended Parker, which sure as hell should have made him more attentive to abiding by his firm's and FINRA's rules and regulations.
Directing and Instructing the Assistant
Even giving Parker all the benefit for his cited misconduct, FINRA's $10,000 fine and four-month suspension fails to address what I view as the far most serious misconduct at issue; namely, Parker's enlistment of his subordinate, female assistant. As clearly and unequivocally alleged in the AWC [Ed; highlighting added]:
Parker directed his assistant to obtain that information by impersonating the customer. Specifically, Parker instructed the assistant to have all of MP's personal confidential information in front of her . . . he explicitly instructed his assistant to "get around" the insurance company's privacy policies by pretending to be MP. At Parker's direction his assistant carried out his directions.
As I see the guts of FINRA's allegations, it's largely about "getting the girl to do it." Given the sexual politics on Wall Street and in Wall Street's branch offices, the overwhelming majority of these assistants-as-impersonators cases involve superiors (frequently male) "directing" "instructing" "permitting" or "requesting" their underlings (frequently women) to engage in misconduct in violation of the employer's and/or FINRA's rules and regulations. FINRA should see the bigger picture and better comprehend the subtle pressure exerted. It's shameful that there isn't so much as a word of disapproval in the AWC about Parker's interactions with his subordinate, female assistant. As depicted in the AWC, she is of no concern to Wall Street's powerful self-regulatory-organization. She is afforded all the empathy that would be given to an office vending machine. Do as directed. Perform as instructed. No matter the nature of the task. Just when the hell will FINRA step forward and protect the industry's less powerful and powerless?