December 2008 Felony Charge
According to online FINRA records as of October 19, 2012, Ritzer's December 4, 2008, felony charge was for Strangulation Second Degree to which he pleaded Not Guilty, and the charge was dismissed on September 7, 2011 - which varies from the May 25, 2011, date in the AWC.
December 2010 Felony Charge
In another unrelated incident, FINRA's online records disclose that on December 13, 2010, Ritzer was charged with the felony of Protective Order Violation, to which he pleaded Not Guilty. On July 6, 2011, that felony charge was amended to the Misdemeanor Violation of Condition of Release, to which Ritzer pled Guilty and was sentenced to one year in jail, the sentence of which was suspended; and two years probation.
March 2011 Felony Charge
In yet another unrelated incident, FINRA's online records also disclose that on March 30, 2011, Ritzer was charged with the Felony of Violation of Protective Order to which he pled Not Guilty; and this charge was amended on August 4, 2011, to the misdemeanor Violation of Conditions of Release, to which he pled Guilty and received a sentence of one year in jail, the execution of which was suspended; and two years probation.
SIDE BAR: According to published press reports: "Man charged with violating protective order in Fairfield" (Fairfield Citizen, April 2, 2011), Ritzer had allegedly entered the home of his ex-wife to pick up his children although a protective order at the time purportedly had required him to remain in his car at the end of the driveway during such pick-ups. In addition to entering the home's front foyer, Ritzer allegedly verbally abused his former wife.
Quality of Mercy
FINRA's handling of Ritzer's non-disclosure of his 2008 felony charge shows marked restraint by the regulator, particularly since the non-disclosure spanned a time of two additional criminal incidents; moreover, there does not appear to have been a finding of willful non-disclosure, which may have led to a statutory disqualification.
Perhaps the self-regulatory organization gave some weight to the subsequent dismissal of the 2008 felony charge and weighed the likely entangled nature of the broker's domestic situation and his attendant legal problems. Although not stated in the AWC, it appears that Ritzer had timely disclosed the other two felony charges of December 2010 and March 2011; otherwise, I would expect that his non-compliance would have been cited by FINRA in the AWC.
Lessons To Be Learned
For registered persons and industry applicants, a number of valuable takeaways:
BrokeAndBroker.com Blog regularly covers these FINRA U4 criminal disclosure cases. Folks at Merrill Lynch, Morgan Stanley, JP Morgan, Wells Fargo, Citigroup, and other major organizations are just as apt to fall victim to the intricacies of what needs to be disclosed and when as their counterparts at smaller shops. Moreover, given the frequency with which industry members run afoul of the disclosure obligations for charges and convictions, it seems that the Form U4 needs to offer more detailed guidance as to what needs to be disclosed. Having represented many individuals (and spoken to even more) concerning the issues raised in this column, I think that FINRA has, to some degree, created a regulatory speed trap.
Without question - and please note my unequivocal position here - Wall Street regulators, employers, and the public have every right to inquire about felony and certain relevant misdemeanor charges and convictions. Similarly, for those with such disclosable criminal histories, the intentional failure to disclose such background raises very troubling concerns.
On the other hand, many folks who run afoul of the criminal justice system wind up with dismissed cases, deferred prosecutions, and expungements - indeed, there are times when the innocent are handcuffed, arraigned, and cleared. Similarly, most defendants are laypersons with an imperfect understanding as to whether their case was dismissed in a manner that precluded the necessity to subsequently disclose charges or guilty pleas. These issues become complicated even further by variances among how the states treat dismissals and, yet again, by differences between state and federal criminal practice.
Given my prior career as an attorney with two Wall Street regulatory organizations and as a lawyer in private practice who often represents individuals charged with non-disclosure of criminal histories, I know that a significant number of such cases involve not a desire to cover-up but a simple misunderstanding of FINRA's disclosure requirements - and while ignorance of the law is no excuse, at some point, regulators are on notice that there are too many folks with similar misunderstandings of common issues.
A simple solution would be for FINRA to prominently display an 800 number or email address at which U4 applicants and others could get a good-faith safe-harbor answer from the Staff as to whether a "Yes" or "No" answer is required. Obviously, FINRA has every right to predicate such an opinion on being provided with an accurate set of facts and the opinion should explicitly note that it is so limited. The actual opinion may be limited to a written communication that references the fact pattern presented. If FINRA wants to charge a modest processing fee, go ahead.
To persist in hiding behind the rubric that a regulator can't give "legal advice" but then charge and sanction folks who were befuddled by a sincere misunderstanding is unfair. Inherent in this recurring criminal disclosure problem is that many respondents in addition to Respondent Ritzer simply don't recognize that there is a disclosable matter because they thought that their case was favorably "closed" or the charges dismissed.
If there had been such an 800 number, perhaps Ritzer would simply have telephoned FINRA and said this is what happened with the charge and my plea, do I have to answer "YES" to either or both? If such guidance were made prominently available and easily reachable, and an industry applicant did not use the opportunity and failed to properly disclose, I would fully support FINRA's sanctions in such a case; however, note my emphasis on offering guidance that is prominently displayed AND easily reachable.
How fair is fair and simple is simple? For me, just put on the Form U4 a boldfaced notice such as this:
FAILURE TO ACCURATELY ANSWER CRIMINAL HISTORY QUESTIONS MAY RESULT IN THE IMPOSITION OF FINES AND SUSPENSIONS, INCLUDING BARS. IF YOU HAVE A DISCLOSURE QUESTION, TELEPHONE FINRA'S "CRIMINAL HISTORY" HOTLINE AT 800-xxx-xxxx OR EMAIL CrimHot@FINRA.org. FOR MORE DETAILS VISIT THE FREQUENTLY ASKED QUESTIONS PAGE AT FINRA.ORG/CRIMINAL HISTORY FAQ.
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