Home Delivery of Customer Records Not Good Take Out

FACTS AND VIOLATIVE CONDUCT

Regulation S-P requires that member firms have procedures to, inter alia, ensure the security and confidentiality of customer records and information and protect against unauthorized access to or use of customer records or information that could result in substantial harm or inconvenience to any customer. In January 2011, while registered with NIS and in anticipation of his move to a new firm, Schulman moved documents related to NIS customers he serviced from his NIS office to his home. The documents contained nonpublic personal information as that term is defined under Regulation S-P of the Securities Exchange Act of 1934, and Schulman moved them without authorization and in contravention of NIS's policies. Most of the documents were moved on Sunday, January 16, 2011. Among other things, the nonpublic personal information included customers' asset and income information, health information, addresses, birth dates, and employment information. By removing the customers' files from NIS's control and possession, Schulman placed the customers' nonpublic personal information at risk. By virtue of the foregoing, Schulman violated FINRA Rule 2010.

REPRESENTATIVE WAS DISCHARGED AFTER HE ENTERED THE OSJ AFTER HOURS WITHOUT ANY APPARENT LEGITIMATE BUSINESS PURPOSE AND REMOVED CONFIDENTIAL AND PROPRIETARY DOCUMENTS.

SPECIFICALLY MY AGENT CONTRACT WITH NORTHWESTERN MUTUAL MADE CLEAR THAT AS AN AGENT, I AM FREE TO EXERCISE MY OWN JUDGMENT (SECTION RELATIONSHIP) AND DETERMINE THE TIME, PLACE AND MANNER OF MY CONDUCT. MOREOVER, SECTION 11: RECORDS OF THE AGENT CONTRACT EXPRESSLY STATES THAT IT IS MY RESPONSIBILITY TO "HOLD AND PRESERVE ALL RECORDS RELATING TO TRANSACTIONS BY OF FOR NORTHWESTERN MUTUAL." THUS THE AGENT CONTRACT MAKES IT CLEAR THAT I WAS PERMITTED TO CONDUCT BUSINESS AT ANY TIME OF DAY, INCLUDING "AFTER HOURS" AND THAT NOT ONLY WAS I ENTITLED TO POSSESS FILES RELATING TO TRANSACTIONS CONDUCTED FOR THE BENEFIT OF NORTHWESTERN MUTUAL, BUT I WAS OBLIGATED TO HOLD THESE FILES AND ENSURE THAT THEY ARE IN GOOD ORDER ALTHOUGH THERE DO NOT APPEAR TO BE ANY PROVISION THAT RESTRICTED MY ACCESS TO THE OSJ TO "LEGITIMATE BUSINESS PURPOSE" ONLY. THE FORM U5 DISCLOSURE NONETHELESS IMPLIES THAT MY CONDUCT WAS NOT LEGITIMATE. IF THERE WERE QUESTIONS REGARDING THE BUSINESS PURPOSE OF MY VISIT TO THE OFFICE, THEN THE APPROPRIATE PERSONNEL SHOULD HAVE INQUIRED AND I WOULD HAVE CLEARED UP THE CONFUSION. I BELIEVE THAT NMIS PURPOSEFULLY DID NOT MAKE THESE REASONABLE INQUIRIES NOR DID THEY REVIEW THE APPLICABLE CONTRACTS, RATHER, THE U5 DISCLOSURE SEEMS TO BE CONSISTENT WITH TH OTHER RETALIATORY EFFORTS OF NMIS, THE RUSSO GROUP AND NORTHWESTERN MUTUAL. IN THE MONTHS LEAPING UP TO MY TERMINATION FROM NMIS, I HAD BEEN HONEST ABOUT MY CONVERSATIONS WITH COMPETING AGENCIES AND MY THOUGHTS ABOUT LEAVING IF CERTAIN THINGS DID NOT IMPROVE. AS YOU CAN UNDERSTAND, A LOT GOES INTO A DECISION TO CHANGE AGENCIES, INCLUDING THE NEED TO UNDERSTAND THE LEVEL OF COMMISSIONS BEING LEFT BEHIND AND THE DESIRE TO ENSURE THAT IF DID DEPART, THAT CLIENT FILES WERE COMPLETE AND THAT CLIENTS WOULD NOT BE IMPAIRED BY MY CAREER CHOICES AT THE TIME I WAS TERMINATED, I HAD NOT YET FINALIZED MY DECISION REGARDING MY FUTURE WITH THE RUSSO GROUP. MY TERMINATION MADE THE DECISION FOR ME.

AT THE TIME I WAS TERMINATED, NORTHWESTERN MUTUAL DEMANDED THAT I RETURN THE CLIENT FILES THEN IN MY POSSESSION. ALTHOUGH THE OPERABLE AGREEMENTS DO NOT SPECIFY THE TIME PERIOD WITHIN WHICH THIS RETURN OF FILES NEEDED TO OCCUR, I RETURNED THE FILES WITHIN FOUR BUSINESS DAYS OF THE DEMAND TO DO SO, WHICH IS REASONABLE. OVER THE YEARS I HAVE KNOWN MANY AGENTS WHO LEFT THE RUSSO GROUP AND OPENLY TOOK CLIENT FILES WITH THEM WITHOUT ANY PROBLEMS. I HAVE CLEARLY BEEN SINGLED OUT FOR ADVERSE TREATMENT AS THESE INDIVIDUALS WERE NOT TREATED THE WAY I HAVE BEEN TREATED NOR DID THEY HAVE SIMILAR ENTRIES ON THEIR US.

I WOULD ALSO LIKE TO POINT OUT THAT THE RUSSO GROUP UNILATERALLY TERMINATED MY STATUS AS A NORTHWESTERN MUTUAL AGENT WITHOUT ADVANCE NOTICE, DESPITE THE FACT THAT MY ACTIONS WERE ENTIRELY WITHIN THE SCOPE OF MY AGENT CONTRACT AND CONSISTENT WITH PAST PRACTICE. BY DOING SO, THE RUSSO GROUP BREACHED THE AGENT CONTRACT, WHICH ONLY PERMITS IMMEDIATE TERMINATION FOR CAUSE, SUCH AS THE FAILURE OF AN AGENT TO COMPLY WITH THE TERMS OF THE AGENT CONTRACT. I SHOULD HAVE BEEN AFFORDED THE 30 DAYS REQUIRES BY THE AGENT CONTRACT, WHICH ALSO WOULD HAVE ALLOWED ME TO COLLECT COMMISSIONS GENERATED DURING THIS PERIOD. THESE ACTIONS ARE CURRENTLY THE SUBJECT OF CONVERSATIONS BETWEEN MYSELF AND NORTHWESTERN MUTUAL AND MAY ESCALATE.

DURING MY CAREER, I HAVE PRIDED MYSELF ON MY ETHICAL AND STRAIGHTFORWARD DEALINGS. I RESPECTFULLY REQUEST THAT YOU CONSIDER THE FACTS AT PLAY HERE AS WELL AS THE MOTIVATIONS OF THE RUSSO GROUP AND NMIS IN ATTEMPTING TO DARKEN MY OTHERWISE PRISTINE BUSINESS CONDUCT RECORD.

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