An irreverent Wall Street Blog
by Bill Singer
 
Join BrokeAndBroker blog on Facebook  Follow the BrokeAndBroker blog on Twitter  Connect with BrokeAndBroker on LinkedIn  Join Bill Singer on Google+  Subscribe to RSS Feed

UPDATE: The Wells Fargo Broker Who Would’nt Give In to FINRA Bar
Written: May 20, 2011

During the dire days of World War II, British Prime Minister Winston Churchill said:

Never give in, never give in, never; never; never; never – in nothing, great or small, large or petty – never give in except to convictions of honor and good sense.

Former Wells Fargo Advisors LLC’s (“WFA”) registered representative Denise Lynn Gizankis took Churchill’s admonition to heart.

FINRA Bar

On January 25, 2011, Gizankis filed an application for review of a Financial Industry Regulatory Authority (“FINRA”) disciplinary action, which had barred her for failing to respond to a request to provide information in connection with her termination from WFA.  In seeking to have the Securities and Exchange Commission (“SEC”) set aside FINRA’s bar, Gizankis explained that because she recently relocated to another state, she had not received FINRA’s demands for the production of information or the subsequent suspension notices that resulted in her Bar.

FINRA’s records reflect that it first suspended Gizankis for non-compliance with its demands for information on October 21, 2010, and, thereafter, barred her on December 30, 2010.

SIDE BAR: FINRA Rule 9552 provides that FINRA may suspend a person subject to FINRA’s jurisdiction who fails to provide information and that, if the person subsequently fails to request termination of the suspension within three months, that person will be automatically barred.

FINRA Rule 8210 requires persons associated (or formerly associated) with a member firm to provide information with respect to any matter related to an investigation, complaint, or proceeding.

All’s Well That Ends Well

On March 16, 2011, FINRA filed with the SEC a “Motion to Dismiss Application for Review and to Stay Briefing Schedule.” In that motion, FINRA stated that Gizankis’s application for review included “information responsive to FINRA’s information requests.” Not only did Gizankis provide whatever information FINRA had initially been seeking, but she apparently demonstrated that there were “extraordinary circumstances that made her unavailable.”

In consideration of Gizankis’s ultimate compliance with FINRA’s Rule 8210 demands and the extraordinary circumstances that caused the tardy response, FINRA entered into a Letter of Acceptance, Waiver, and Consent, that settled the matter “for a sanction less than a Bar.” (NOTE: The SEC’s Decision does not detail what that lesser sanction was).

Given that the issues in dispute are now rendered moot, the SEC dismissed Gizankis’s application for review. In the Matter of the Application of Denise Lynn Gizankis for Review of Action Taken by FINRA (Order Dismissing Petition for Review, Securities Exchange Act Of 1934 Rel. No. 64391 / Admin. Proc. File No. 3-14206, May 4, 2011).

Bill Singer’s Comment:  Having worked as a lawyer for two self-regulatory organizations and as a defense lawyer, I know that most of these non-response cases are what they are — individuals who are in trouble simply refuse to reply, foolishly believing that the matter will simply go away if they don’t answer.  In such cases, a significant suspension or Bar may well be warranted.

On the other hand, there are many situations where individuals simply do not recieve mailed notices or have replied and their communication is lost in transmission.  In far too many of these situations, the regulators refuse to exercise reasonable discretion and jam up the system with the silliness that is evident in Gizankis.  One can only imagine the wasted time and legal expenses imposed upon Gizankis, FINRA, and the SEC to process this appeal when a simple waiver from FINRA months earlier could have achieved the same outcome. 

UPDATE

It appears that FINRA first attempted to communicate its production demands to Gizankis via letter dated March 5, 2010, and again on April 12, 2010. On September 27, 2010, FINRA initiated proceedings against Gizankis for her failure to respond, resulting in first a suspension and then a bar on December 30, 2010 .

On January 6, 2011, one week after Gizankis was barred, FINRA received a one paragraph letter from her acknowledging receipt of the September 27th notice of proceedings and providing her new mailing address. The letter was dated December 15, 2010, but postmarked December 31, 2010. In her letter, Gizankis also requested a termination of the proposed suspension. The letter did not provide a substantive response to FINRA’s demands for information and documents that dated back to March 5, 2010.

On or about January 25, 2011, Gizankis appealed FINRA’s Bar to the SEC. In a letter to FINRA dated that same date, she also provided the information previously requested.  As noted above, FINRA thereafter decided to resolve the matter via an AWC with Gizankis, thus rendering her SEC appeal moot.

As a result of the AWC that she submitted, Gizankis agreed to the imposition of a 6 month suspension and a $5,000 fine. In the Matter of Denise Lynn Gizankis, Respondent (FINRA AWC #2010021840402, Accepted March 2, 2011)

Bill Singer’s Comment: Given the update and apparent conclusion to this matter, let me set forth the salient dates:

  • March 5, 2010: First 8210 demand letter from FINRA to Gizankis
  • April 12, 2010: Second FINRA 8210 demand letter
  • December 30, 2010: FINRA Bars Gizankis
  • January 6, 2011: FINRA receives notice from Gizankis (postmarked December 31, 2010) of her new address
  • January 25, 2011: Gizankis files SEC Appeal. Gizankis sends responsive letter to FINRA
  • March 2, 2011: FINRA accepts AWC from Gizankis
  • March 16, 2011: FINRA files Motion to Dismiss Gizankis’s SEC Appeal

I accept FINRA’s version of the facts and have no issue with barring a registered person for failing to respond to Rul3 8210; however, I am still left with the fact that on January 25, 2011, Gizankis fully and satisfactorily responded to FINRA’s outstanding 8201 demands.  Moreover, FINRA negotiated and accepted an AWC from Gizankis on March 2, 2011 — which strongly suggests that the negotiations were ongoing during February 2011.

Given that FINRA had Gizankis’s responses in January and had settled the case on March 2nd, why did it take two more weeks until March 16th to notify the SEC of the resolution — and why couldn’t this appeal have been pulled earlier in February or January? 

To be fair, the appeal was filed by Gizankis and perhaps she was unable or unwilling to withdraw her application. That is an equally credible explanation. However, nearly two months transpired from when she produced the responses that FINRA now deems as acceptable until such time as the self-regulator notified the SEC that the sanction of a Bar was off the table and the need for the appeal was rendered moot.  My guess — and it’s only that — is that there was far too much regulatory posturing by FINRA and not enough consideration for the ongoing waste of time and resources. 

Looking for a Wall Street job as a broker, compliance professional or industry lawyer? Don't forget to check daily at BrokeAndBroker's employment page. All searches customizable by geography and occupation.

Job search by Simply Hired
Jobs

Post a Job! $25 for 30 days

 

Naming, Blaming, and FINRA Gaming

Suppose that an unhappy investor didn't specifically name you in a lawsuit or arbitration when he complained about your investing advice. You'd think that would get you off the regulatory disclosure hook, right? Think again.

According to the Financial Industry Regulatory Authority's rules, you could still be required to file a disclosure report even if your name is omitted from the caption of respondents (in arbitrations) or defendants (in court proceedings) — and even if you're not identified by name in the complaint.

FINRA requires your member firm to make a good faith determination about whether you were the responsible “unnamed” registered person. If your firm reads between the lines and figures out that it's you, you will likely wind up with a report on your Central Registration Depository (“CRD”) or Form U4.

Consider how one broker recently dealt with this dilemma: Naming, Blaming, and FINRA Gaming


Topics: FINRA  Bill Singer  BrokeAndBroker  Wells Fargo  8210  SEC  Appeal  
 
[^top^]

Previous Entries
April 16, 2014
Here's an interesting cocktail of facts: an IRA, a mother, powers of attorney, and a stockbroker son. Add into that mix questions about whether a $60,... Read On
April 15, 2014
Stockbroker, Compliance, Legal, and Regulatory JobsFor a full listing of current job openings, visit the BrokeAndBroker Employment Page ... Read On
April 14, 2014
Auction Rate Securities are the unwanted gift that keeps on giving. In today's BrokeAndBroker.com Blog, we report about yet another bit of collateral ... Read On
April 12, 2014
Citicorp Loses Bizarre Motion To Compel Class Action ArbitrationApril 11, 2014As part of the terms of his employment, former Citicorp Credit Services,... Read On
April 11, 2014
As part of the terms of his employment, former Citicorp Credit Services, Inc. employee Keith Russell had agreed to arbitrate “all employment-related d... Read On
April 10, 2014
Citigroup goes after another former employer to recover a balance on a promissory note. Nothing new here. In this case, the former registered person f... Read On
BrokeAndBroker.com Job Search
Related Topics
Tag Cloud
Internet FINRA Bear Stearns Bloomberg SEC NASD NYSE Money Laundering Due Diligence Waiver Forbes China Chepucavage Broy Woody Allen Madoff NAC NPR Marketplace Stanford UBS Ketchum Antitrust NASDAQ RRBDLAW Schapiro Bill Singer BrokerAndBroker USERRA Brokeandbroker.com Morgan Keegan Arbitration BrokeAndBroker.com Khuzami BrokeAndBroker Aleynikov Goldman Sachs brokeandbroker Promissory Note U4 Bill SInger EFL CFTC Huffington Post Flash Crash arbitration RBC RRBDLAW.com Ponzi Affinity Fraud Wachovia Raymond James BrokeandBroker.com Expungement Fraud Securities Fraud Outside Business Activity Registered Rep Magazine FOREX BrokerAndBroker.com FBI Banc of America Pro Se Supreme Court Morgan Stanley Smith Barney E*Trade Margin email Galleon Penson U5 Defamation Protocol Wells Fargo Punitive Damages Citigroup Merrill Lynch ARS Employee Forgivable Loan Street Legal Morgan Stanley AWC Fidelity Bankruptcy Broke And Broker HFT David Sobel Day Trading Ameriprise Commissions Spouse Schwab CRD Kenneth Starr IRS CNBC Complaint ATM Skimming Hacking Phishing Malware Naskovets Poteroba Koval Lincoln Financial Selling Away Outside Business Activities Rakoff 2nd Circuit Second Circuit IRA 401k Forgery Tax RRBDlaw.com Email Netschi Moore Whistleblower Street Sweeper Tran Bharara Facebook Online Severance Bonus Eligibility Rule TD Ameritrade Hedge Fund SAC 1099 Smith Barney Lehman Brothers IC3 Scottrade Lehman JPMorgan Chase Hertz Insider Trading Bank of America Elles Bribe Auction Rate Securities Raiding Spam Edward Jones Medicare Diabetes Dow Schumer Walter Bid Rigging Real Estate Discrimination Wall Street Statutory Disqualification Form U4 Form U5 Indictment Boyland DOJ Corruption bill singer FTC Do Not Call FINRA Arbitration Costa Rica Settlement LIBOR Varney Plea Rule 8210 RRBDlaw Appeal Fowler LPL Johnson US Airways Reg D MSSB Vault Loan SunTrust Discovery Employment Rosenthal Recruiting Lawyer Trading Platform JP Morgan Employment Tuesday Wrongful Termination Bank Guarantee WaMu Solicitation REIT Martin Credit Cards Away Account Credit Repair PN Advisor Placement Group Forex Mortgage Private Placement Moon Merrill Anderson Exam Lee Borrowing Tax Lien Conversion Oppenheimer Wedbush Felony Misdemeanor Expenses ING Lien OTR Estate Jobs Florida Credit Card Elderly Flash Drive Annuity FNMA BrokeAndBroke TIC DWI Promissory Notes Suitability Will POA Power of Attorney Casino NSF MF Global Counterfeit Preet Bharara Corzine Hacker Prison NASAA Aguilar FCPA Identity Theft Gold Dell Bar Injunction Bank Deutsche Bank God HSBC Private Placements Eric Stein Wire Fraud CCO Joshua Brown Backstage Wall Street Obstruction of Justice Retaliation Variable Annuity Outside Account Options Telephone Wine Social Media ADA Pacifico Non-Prosecution Agreement Confirm Tax Fraud Retirement OBA Equity Indexed Annuities EIA MetLife Continuing Education Impersonation Annuities BBVA Business Expenses OIP ETF JOBS Act Mail Fraud Parking Variable Annuities Signatures BitTorrent Wire Transfer Wire Crowdfunding Nasdaq Away Accounts WSP Laptop Dodd Frank Checks PST Solicited Unsolicited Congress SRO Wife Discretion Non-Solicitation Restaurant Commodities Private Securities Transaction Offer of Settlement employment jobs Great Recession Chase Investment Services Barclays Willful Apple Time And Price T&P Husband Letter of Authorization LOA Knight Test Practice Sale Unfair Competition Signature Judgments Undisclosed Settlement Trainee Fee Trust Laser Side Bar Mattera Female Sales Assistant Kennedy Argentina Judgment Bank Fraud TSSB Trustee Frumento 6th Circuit Proctor Beneficiary NYAG Schneiderman Gallagher White Compromise Website Supervision Piwowar signature VA
 
Email Bill Singer Connect with Bill Singer on Facebook Follow Bill Singer on Twitter Link up with Bill Singer on LinkedIn Join Bill Singer on Google+