Stockbroker's Better Buy At Best Buy Leads to Industry Bar And Disqualification

December 16, 2011

In May 2008, Jovany Josefy Lind registered with the Financial Industry Regulatory Authority ("FINRA") member firm El Asset Management, Inc. (EAMI) ,where he remained until September 25, 2008. There are many reasons for firing someone from a job - some of which even lead to lawsuits; however, in Lind's case, his employer's explanation for his termination is a classic: "failure to show up for work."  That's sort of gonna get you kicked to the curb every time. I mean, you know, there are few more basic prerequisites for keeping a job than showing up.

A Better Buy?

About eight months after not showing up for work at EAMI, Lind seemed to have caught up in some dubious conduct. Around May 29, 2009, Lind was charged in Criminal Court in New York County with Grand Larceny in the Fourth Degree, a felony, for allegedly stealing Best Buy property valued at $1,387.13.

SIDE BAR: On March 18, 2010, Lind pleaded guilty to a violation (an offense that is lower than a felony or misdemeanor) of disorderly conduct, which required him to pay a surcharge. According to an online FINRA document as of December 16, 2011, Lind had previously been employed by Best Buy from November 2004 through July 2005.

Second Chance

Doing his best imitation of the Prodigal Son, about a year after getting fired (and four months after being charged with a felony), Lind returned to EAMI. On September 18, 2009, Lind signed a Form U4 that was submitted to FINRA's Central Registration Depository ("CRD") .  On the Form U4, under  the heading of"Criminal Disclosure," Question 14A( 1) (b) asks if the applicant has ever: been charged with any felony?

In response to that query, Lind entered  "NO."

No? No?? As in "no" I am not still subject to the May 2009 Grand Larceny felony charge for helping myself to some Best Buy merchandise?

Sadly, although Lind's second go-round with EAMI began on October 6, 2009,  by October 23, 2009, he was discharged for "lack of attendance" and his registration was terminated on November 17, 2009.  Alas, going from not showing up for work to a lack of attendance isn't quite what most employers are looking for these days.


FINRA investigated Lind's non-disclosure of his felony charge and starting in December 2009, sent him four written requests  for documents and information  to his last known address as indicated on his CRD file.  Given Lind's job history of not showing up or not attending, it's really not all that surprising to learn that he failed to respond to FINRA's requests.

Around February 16, 2011, FINRA Enforcement spoke with Lind, during which time he confirmed his mailing address.  On March 4, 2011, Enforcement staff left detailed voicemail messages on Lind's home telephone and cell phone notifying him that he had not responded to their previous requests for information, and that he was required to do so. Thus setting the stage for, yup, you guessed it, FINRA sent a fifth written request on March 8, 2011.


Not surprisingly, Lind did not appear at his FINRA disciplinary hearing, which was conducted as a Default Hearing. Financial Industry Regulatory Authority Department Of Enforcement, Complainant, vs. Jovany Josefy Lind, Respondent (Default Decision, #2009020589801, December 12, 2011). The FINRA Hearing Officer found  that Lind had:

  1. repeatedly failed to respond to requests for information in connection with FINRA's investigation of the circumstances of his termination by his FINRA member firm, in violation of FINRA Rules 8210 and 2010; and
  2. willfully failed to disclose on his Form U4 that he was the subject of a pending felony charge, in violation of Article V, Section 2 of FINRA's By-Laws and FINRA Rules 1122 and 2010;

For the failure to respond violation, the FINRA Hearing Officer imposed a bar from association with any FINRA registered firm in any capacity. For the willful non-disclosure violation, the Hearing Officer imposed a 30-business-day suspension. The Hearing Officer did not impose upon Lind the additional sanction of a suspension for his willful failure to disclose the pending felony charge because the suspension would be superfluous in light of the imposed bar. Finally, Lind became statutorily disqualified from associating with a FINRA member firm in the future as a result of the finding that Respondent's filing of a materially false and misleading Form U4 was willful.

Bill Singer's Comment

For Wall Street insiders, the issue of Forms U4 and U5, and the whole fear of becoming statutorily disqualified is among the most common reasons for calling an industry lawyer.  And don't think that this is just a concern for brokers at penny-stock firms or shady operations - to the contrary, as the DUIs add up, as the daily stress drives more folks to drug and alcohol issues, as the economy drives more folks to seek bankruptcy or evade judgements and liens, these concerns extend to brokers at the big-name firms of Merrill Lynch, Citigroup, Morgan Stanley, Goldman Sachs, JP Morgan, and also find their way to independent brokers at LPL or Schwab.  There's very little discrimination between small and large when it comes to these disclosure issues.

The nuance that may be lost on many readers is that Lind was not statutorily disqualified for having merely been "charged" with a felony - which would never be the case barring a further plea or adjudication.  Moreover, Lind was not statutorily disqualified as a result of a felony conviction because he ultimately pleaded to a mere violation.

When registered persons are charged with a felony, only a subsequent guilty plea or conviction of a felony will result in an automatic statutory disqualification.  In Lind's case, however, he was deemed SD'd because he had willfully failed to disclose the mere charge of the felony.  If Lind had inadvertently failed to make that same disclosure - as a result of being misinformed by his lawyer or because of some other credible explanation - a finding of failing to disclose the felony (but not of willfully failing) would not have resulted in his SD status.