After Borrowing From Customer, Stockbroker Ordered To Pay Restitution

March 7, 2013

A picture taken on February 8, 2011 in Rennes,...

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, Richard Prim submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Richard Prim, Respondent (AWC. 2011028869801, February 28, 2013).

Richard Prim entered the securities industry in February 1999, and by 2004 he was associated with former FINRA member firm NelsonReid, Inc. ("NelsonReid"), until his July 20, 2011 termination.

Prior History

On February 6, 2006, the NYSE issued a Panel Decision (No. 05-166)  as a result of a Stipulation of Facts and Consent to Penalty entered into between Prim and Enforcement for the purpose of settling charges alleging violations of NYSE Rule 346(b) based upon Prim's, on one or more occasions, engaging in an outside business without making a written request and receiving the prior written consent of his member organization employer; and making misstatements to his member organization employer concerning an outside business activity. The Panel imposed upon Prim a Censure and a Bar for five months from membership, allied membership, approved person status, and from employment or association in any capacity with any Exchange member or member organization.


During the relevant period between August 2006 and August 2007, while registered with NelsonReid, the AWC alleges that Prim borrowed $6,000 from a firm customer but did not provide notice to or receive permission from his firm, notwithstanding that its written supervisory procedures prohibited borrowing from customers.

Form U4 Amendments

During the relevant period from January 2002 to July 2011, the AWC alleges that although at least seventeen amendments were filed on Prim's Uniform Application For Securities Industry Registration Or Transfer  (the "Form U4″)  by four different FINRA member firms, he willfully failed to amend his Form U4 to disclose:

  • December 27, 2001; a civil judgment in the amount of $21,274; and
  • December 2, 2002, July 21, 2003, September 15, 2006, and February 2, 2010: IRS tax liens in the respective amounts of $13,514, $7,924, $1,042 and $32,297.

Adding Up The FINRA Tab

As a result of the foregoing misconduct, Prim violated:

  • Borrowing From Client: NASD Conduct Rules 2370 and and 2110.
  • Failure to Amend U4: Prim violated Article V, Section 2(c) of NASD's By-Laws (for his actions prior to July 30,2007) and Article V, Section 2(c) of FINRA's By-Laws (for his actions on and after July 30,2007), IM-1000-1 (for his actions prior to August 17,2009), FINRA Rule 1122 (for his actions on and after August 17,2009), NASD Conduct Rule 2110 (for his actions prior to December 15, 2008), and FINRA Rule 2010 (for his actions on and after December 15,2008).

In accordance with the terms of the AWC, FINRA imposed upon Prim a $10,000 fine and a six-month suspension from association with any FINRA member firm in any capacity. Additionally, Prim was ordered to pay $3,500 restitution plus interest from August 31, 2007 until paid. If for any reason he cannot locate the customer after reasonable and documented efforts as agreed to in writing with FINRA staff, Prim shall forward any undistributed restitution and interest to the appropriate escheat, unclaimed property, or abandoned property fund for the state in which the customer is last known to have resided. Finally, Prim specifically and voluntarily waived any right to claim that he is unable to pay, now or at any time hereafter, the monetary sanctions imposed in this matter.

See these Borrowing columns in "Street Sweeper":