During the time relevant to this matter, Timothy M. Wheeler was registered between June 2010 and December 2010 with Financial Industry Regulatory Authority ("FINRA") member firm Morgan Stanley Smith Barney. As a condition of his employment upon joining Morgan Stanley on May 7, 2010, Wheeler was required to pass the following examinations:
On May 8, 2010, and June 29, 2010, Wheeler passed, respectively the Series 63 and Series 7 examinations; however, on July 15, 2010, he failed the Series 66.
If At First You Don't Succeed - Try Only Once More
At the time of Wheeler's Series 66 failure on July 15, 2010, Morgan Stanley's policy was to terminate employees who failed the Series 66 examination twice - which Wheeler apparently knew prior to re-taking the exam on August 23, 2010. Unfortunately, Wheeler failed the second Series 66 in August .
The PROCTOR system is a computer system specifically designed for the administration and delivery of computer-based testing and training. Through PROCTOR, FINRA offers a variety of exam/continuing education sessions at various sites. Purportedly, the PROCTOR system captures every key stroke made by a test taker, and, ultimately, generates a score for each portion of the examination and a total final score.
SIDE BAR: To learn more about PROCTOR, visit this FINRA webpage. In part, this page explains that:
At the end of the allowed testing time or when you voluntarily stop your exam, the system determines your score and displays a grade result on the computer. The grade report will show whether you passed the exam. You will receive a printout of the score results when you sign-out with the test center administrator. FINRA posts the result to Web CRD within two business days.
Equipment problems do occasionally occur; normally center staff can quickly correct any difficulty you experience while taking a session. If you notice any malfunction with your computer, tell the center administrator immediately. . .
The PROCTOR system tagged Wheeler's re-test of the Series 66 as "Timothy Wheeler Series 66 08/23/2010 Session Details." At 10:28:50 a.m. on August 23, 2010, his score failing score of 60%, was disclosed to him by the PROCTOR system, which then displayed instructions for reapplication for the exam, which Wheeler acknowledged via keystrokes. The reapplication screen is only displayed to failing exam takers and not to those who pass.
Sealing The Deal
Prior to exiting the PROCTOR examination site, in accordance with protocol, Wheeler was given an embossed score report - standard procedure purportedly countenances that a proctor initials the report and crimps the right-hand portion of the page with a handheld embosser, which produces a raised seal.
Five or ten minutes after returning to his office, which was across the street from exam site, Wheeler gave copies of his score report to his superiors that purported to show that he had passed with a score of 79%. Although Wheeler claimed in an unsworn statement that he left the original August 23rd report with his supervisor, his supervisor stated under oath that Wheeler did not. Also, Wheeler told people in his work area that he had passed the exam.
A week after taking the Series 66 examination, Wheeler attempted to participate in a Morgan Stanley sponsored training program but was denied entrance because FINRA's Gateway records indicated he had failed the Series 66 exam. This discrepancy prompted Wheeler's supervisor, James McCoy, to ask Wheeler to provide Morgan Stanley with the original score report that he received from the exam site's proctor.
The Old Cut And Paste
On September 1, 2010, Wheeler provided McCoy (another Morgan Stanley employee, Lynn Egan, was also present) with what he claimed was the original score report. Apparently, both Wheeler and Egan immediately recognized that Wheeler had submitted a forged report because instead of the usual embossed seal, there was one that had been glued onto the page and was peeling off; also the typing on the document was not straight.
Glued on. Peeling off. Angled typing. For godsakes, that's your best effort?
The Spirit of 76
Compounding his problems, on September 1, 2010, Wheeler sent a copy of the altered document showing his passing score by facsimile to FINRA staff. In addition to the seal inconsistencies, FINRA staff also noted that Wheeler's document had 90 asterisks separating two sections of the report where there only 75 normally appeared. Finally, the report submitted by Wheeler calculated 23 correct answers out of 30 (76.6666%) in a section as a score of 77%, but the PROCTOR system purportedly would not have rounded up and would have only graded that same result as a 76%.
The FINRA Department of Enforcement ("Enforcement") filed a Complaintagainst Wheeler alleging that he had submitted to his firm falsified test results making it appear that he had passed the Series 66 examination when in fact he did not. Wheeler denied the charge in a short letter dated February 21, 2012, but, following rescheduled hearings, on November 9, 2012, he informed FINRA of his intention to not appear at a hearing. The Hearing Officer characterized Wheeler as having waived a hearing, rather than having defaulted, which gave the Respondent an opportunity to present evidence in support of his defense. Enforcement submitted evidence, but Wheeler did not.
Based on evidence submitted by Enforcement, the FINRA Hearing Panel found that Wheeler falsified his test score and that such conduct violated the high standards of commercial honor and integrity embodied in FINRA Rule 2010. FINRA Department of Enforcement, Complainant, v. Timothy M. Wheeler,Respondent (Decision, FINRA Office of Hearing Officers, 2010024320101, February 16, 2013). The Panel found that Wheeler's falsification of his exam results in order to avoid termination for failure to pass in two tries was unjust to Morgan Stanley and constituted an attempt to evade its policies and procedures; and that his misconduct also cast doubt on his ability to be truthful and honest in the future with his firm and with any investors with whom he might do business. Finally, Wheeler's misconduct was deemed egregious and intentional.
The Hearing Panel noted that the FINRA Sanction Guidelines for falsification of records recommend a suspension for up to two years where mitigating factors may exist and a fine from $5,000 to $100,000; however, for egregious violations, a Bar may be considered. Given the facts in this case, the Panel barred Wheeler from association with any FINRA member firm in any capacity.
Bill Singer's Comment
Compliments to FINRA of presenting a thoughtful and comprehensive OHODecision, which detailed the fact finding and made a compelling case for imposition of a Bar.
Exam cheating is not a particularly isolated fact pattern on Wall Street. "Street Sweeper" has written about testing hi-jinks by folks at Merrill Lynch, Wedbush, Chase, MetLife, and other firms. As the reported cases show, if you can think of a variation for cheating, someone has likely done it already. Word to the wise: Study!