FINRA Says Test Taker Lacked Potty Training

August 7, 2012

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, Respondent submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. FINRA AWC 2012030954901 August 1, 2012. 

NOTE: Respondent's name deleted by

Respondent first became registered in December 2011 with member firm Wedbush Securities Inc. and the AWC asserts that he did not have any prior disciplinary history.

Series 7

On or about December 17, 2011, Respondent took the General Securities Representative Examination (the "Series 7″) at the Prometric Testing Center located in Anaheim, CA. According to the AWC, before beginning the examination, Respondent was orally advised that he must place all personal belongings in a locker - which he also electronically confirmed as part of his agreement to abide by the FINRA Test Center Rules of Conduct. Among the rules of conduct governing the testing center was one prohibiting taking any personal items into the examination room (they were to be placed in a provided locker). Another rule prohibited the receipt or attempt to receive any form of assistance during the 
examination or restroom breaks.

Unscheduled Bathroom Break

The AWC alleges that before the start of the examination, Respondent placed a summarized Series 7 study guide in the restroom that was designated for use by examinees. During the examination, Respondent allegedly took unscheduled breaks to enter the restroom where he had placed the study guide. The AWC alleges that "Respondent thereby possessed unauthorized materials for use during the examination."


The AWC alleged that Respondent's testing center actions constituted violations of FINRA Rule 2010, and imposed upon him the sanctions of a $5,000 fine and a two-year suspension from associating with any FINRA member in any capacity.

Bill Singer's Comment

Just playing the lawyer here for a bit, I don't like this case.

For starters, the AWC fails to fully explain what I would consider a very material aspect of this case:  Did any proctor at the testing center see Respondent using the study guide in the bathroom or is there some videotaped evidence of same?  I'm going to "assume" that such was the case but it's absolutely unbelievable that the AWC would fail to include such critical assertions.

Additionally, the AWC seems to make a point that Respondent allegedly took unscheduled breaks to enter the restroom.  Did a proctor accompany him during those "unscheduled" breaks?  Was there something improper about a test-taker asking to go to the bathroom - I mean, c'mon, it happens and we've all been there.  Moreover, assuming that he cheated during a "scheduled" break, would that be okay?  Consequently, I'm not really sure why the AWC reference the unscheduled nature of the break unless FINRA sought to make a point about that, which, unfortunately, the regulator failed to note in its public document.

At best, the AWC seems to assert that Respondent hid a study guide in the bathroom - but we're never told how FINRA learned that he had actually done that.  Consequently, we have this puzzling case in which an individual goes to the bathroom and the regulator seemingly concludes from thin air that  "Respondent thereby possessed unauthorized materials for use during the examination."

Contrary to what many of you may think, test cheating is not a particularly isolated fact patterns for Wall Street. Consider these cases:
As some of the reported cases show, sometimes folks cheat on their exams, sometimes they fudge their scores, and other times, well, if you can think of a variation, someone has likely done it already.

Just do me a favor, puhleeeeeeeeeease - don't send me back nasty comments that I'm defending Respondent or making excuses for him. The only point that I'm making here is that the AWC presents an overly conclusory case when it fails to explain who saw this respondent in the bathroom reading his study guide or what proof FINRA had of such acts. Period.