by Bill Singer
Oral Notice Of Outside Accounts Still Earns FINRA Fine
March 6, 2013
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, Kenneth P. Gettinger submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Kenneth P. Gettinger, Respondent (AWC 2011028859501, February 28, 2013).
Gettinger first entered the securities industry in 2006 when he became associated and subsequently registered with member firm APB Financial Group. LLC. The AWC asserts that Gettinger had no prior relevant disciplinary history.
And Away We Go
Bill SingerContributor
While associated with APB, Gettinger maintained at different FINRA member firms the following accounts:
In September 2006, when Gettinger joined APB, he orally notified his firm concerning each of the above accounts - it was only in March 2010 that he first provided APB with written notice. Gettinger failed to provide any notice to the firms where the accounts were located that he was registered with APB until he provided them with written notice in April or May, 2011.
NASD Conduct Rule 3050. Transactions for or by Associated Persons [Ed: emphasis supplied]
(a) Determine Adverse Interest
A member ("executing member") who knowingly executes a transaction for the purchase or sale of a security for the account of a person associated with another member ("employer member"), or for any account over which such associated person has discretionary authority, shall use reasonable diligence to determine that the execution of such transaction will not adversely affect the interests of the employer member.(b) Obligations of Executing Member
Where an executing member knows that a person associated with an employer member has or will have a financial interest in, or discretionary authority over, any existing or proposed account carried by the executing member, the executing member shall:
(1) notify the employer member in writing, prior to the execution of a transaction for such account, of the executing member's intention to open or maintain such an account;
(2) upon written request by the employer member, transmit duplicate copies of confirmations, statements, or other information with respect to such account; and
(3) notify the person associated with the employer member of the executing member's intention to provide the notice and information required by subparagraphs (1) and (2).(c) Obligations of Associated Persons Concerning an Account with a Member
A person associated with a member, prior to opening an account or placing an initial order for the purchase or sale of securities with another member, shall notify both the employer member and the executing member, in writing, of his or her association with the other member; provided, however, that if the account was established prior to the association of the person with the employer member, the associated person shall notify both members in writing promptly after becoming so associated.(d) Obligations of Associated Persons Concerning an Account with a Notice-Registered Broker/Dealer, Investment Adviser, Bank, or Other Financial Institution
A person associated with a member who opens a securities account or places an order for the purchase or sale of securities with a broker/dealer that is registered pursuant to Section 15(b)(11) of the Act ("notice-registered broker/dealer"), a domestic or foreign investment adviser, bank, or other financial institution, except a member, shall:
(1) notify his or her employer member in writing, prior to the execution of any initial transactions, of the intention to open the account or place the order; and
(2) upon written request by the employer member, request in writing and assure that the notice-registered broker/dealer, investment adviser, bank, or other financial institution provides the employer member with duplicate copies of confirmations, statements, or other information concerning the account or order;
provided, however, that if an account subject to this paragraph (d) was established prior to a person's association with a member, the person shall comply with this paragraph promptly after becoming so associated.(e) Paragraphs (c) and (d) shall apply only to an account or order in which an associated person has a financial interest or with respect to which such person has discretionary authority.
(f) Exemption for Transactions in Investment Company Shares and Unit Investment Trusts
The provisions of this Rule shall not be applicable to transactions in unit investment trusts and variable contracts or redeemable securities of companies registered under the Investment Company Act of 1940, as amended, or to accounts which are limited to transactions in such securities.
By failing to provide timely written notice to:
Gettinger violated NASD Conduct Rule 3050, NASD Conduct Rule 2110 (for Gettinger's actions prior to December 15, 2008). and FINRA Rule 2010 (for his actions after December 15, 2008). In accordance with the terms of the AWC, FINRA imposed upon Gettinger a Censure and a $10,000 fine.