by Bill Singer
FINRA Fines and Suspends Broker For Role as Exhibitor at Dental Convention
September 9, 2011
Talk to enough stockbrokers and Wall Street traders and you'll likely learn that sometimes what they do for a living feels like pulling teeth. Of course, ask enough Wall Street customers about their dealings with brokers and brokerage firms, and you're also likely to hear stories that the experience is like a root canal, only more painful and costly.
Why all these dental images? Ah . . . how about we just call it a clever bit of dramatic foreshadowing?
For the purposes of settling alleged rule violations but without admitting or denying the findings, Respondent Jaime Lopez submitted a Letter Of Acceptance, Waiver And Consent to the Financial Industry Regulatory Authority ("FINRA") that the regulator accepted. In the Matter of Jaime Lopez , Respondent (AWC/2009018640401, August 29, 2011).
FINRA online records disclose that Lopez entered the securities industry in 2001 as a General Securities Representative, registered with Citigroup Global Markets, Inc. in 2002, which later became Morgan Stanley Smith Barney (both firms referred to as the "Firm"), where he remained until June 2009.
Rinse and Spit?
In or about March 2009, Lopez discussed with the Firm the possibility of his participation as an exhibitor during the Indiana Dental Convention by representing the Firm at a booth in the exhibition hall and distributing literature. Notwithstanding the preliminary discussion, Lopez did not follow up and formally request permission to participate (which the Firm required).
Despite the lack of prior approval, Lopez arranged for and participated as an exhibitor at the dental convention representing the Firm; additionally he distributed, or had available for distribution, literature about the Firm and himself.
Is It Safe?
Dring the course of FINRA's investigation of his role as an exhibitor at the convention, Lopez testified on the record in June 2010 that he did not:
- complete an application to participate at the convention as an exhibitor;
- arrange with a wholesale distributor of financial products to participate with him and share the costs of participating at the convention;
- attend the convention as an exhibitor, and
- send or receive emails to a representative of the dental association or the wholesale distributor regarding the convention.
Ouch! Contrary to Lopez's sworn testimony to FINRA, in fact, it appears that he did every single thing that he denied doing.
Now, not only was he facing FINRA charges for failing to get his firm's approval, but he was also in further trouble for lying to the regulator. It all added up to violations of FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade and FINRA Rule 8210: Provision of Information and Testimony and Inspection and Copying of Books.
Accordingly, FINRA imposed a deferred $5,000 fine and a 2-year suspension with any member in any capacity.
Bill Singer's Comment
One of my standard lines to clients preparing to testify before a regulator is that "there's not much you can do at this point to help yourself, but there's a lot that you can do to hurt yourself." What I mean by that is when an individual is called to testify before the Securities and Exchange Commission, FINRA, a state securities division, or a criminal prosecutor, by that time, whatever is done, is done - you can't really put the toothpaste back in the tube. As such, while it may be legally advisable to decline to answer any questions, it's a terrible idea to lie under oath. Frankly, whatever you're likely being investigated for having done, it's hard to imagine anything that's more likely to anger the investigative agency or a sentencing judge than a determination that you swore to tell the truth and then lied.
In Lopez's case, he was hit with a $5,000 fine and a two-year suspension. I've got to assume that the suspension was largely juiced up in response to Lopez's false testimony. Frankly, given the fact that Lopez had at least discussed his participationg as an exhibitor with the Firm and FINRA does not appear to have made too big a deal about his conduct at the convention or the content of the materials that were distributed, it seems likely that but for his lying under oath, he might have gotten off with a few weeks or months of suspension.