August 14, 2021
There is a saying that to err is human, to forgive divine. In the modern version of that sentiment, we should add "but to fine and suspend is FINRA's mission." In today's blog, we come across a human being who erred. In terms of the misconduct and misdeeds of Wall Street, this respondent's actions don't amount to much at all. No investor was harmed. No brokerage firm suffered so much as a penny's worth of loss. Frankly, the underlying conduct is all too familiar to most of us. Someone hit the wrong button while online and agreed to do something that was never intended.
In a recent federal case, Morgan Stanley raised a number of serious questions about a former employee, but those questions didn't help the firm win a TRO. On the other hand, the former employee is now handicapped in the ensuing race and laboring under the weight of those same questions. Making matters worse, the employee seems to have conceded that some alleged misconduct was an honest mistake.
A recent FINRA AWC sanctions a registered representative for engaging in a complex put strategy on behalf of two customers. FINRA is to be complimented for publishing a very credible settlement document, and industry participants and public investors would do well to read the fact pattern and learn the lessons. Once my applause has died down, however, FINRA would do well to consider some of the questions that I have raised. Notably, if the hallmark of an AWC settlement is that a respondent does not have to admit or deny the findings, how the hell does FINRA tolerate published denials on its BrokerCheck database?