An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
FINRA Says Stockbroker Failed To Fail Exams
April 7, 2014
Sometimes, try as we might, we fail. Could have just been an off day. Could have been a lack of study. Could have been any number of obstacles that life puts in our way. If you're lucky, you might get a second chance. For some, there's even a third chance. For many, however, failure begets failure, and try as you might, you simply emerge with a head that has been bloodied by running into a brick wall. In today's BrokeAndBroker.com Blog, we encounter a two-time loser with a somewhat creative approach to turning lemons into lemonade.
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, John Charles Tibbs submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of John Charles Tibbs, Respondent (AWC 2013038101501, April 1, 2014).
Series 7 and Series 63
The AWC asserts that in 1985, Tibbs entered the securities industry and was approved as a General Sales Representative ("GSR") in June 1987.
SIDE BAR: Although the AWC characterizes Tibbs as being a General Sales Representative, technically, he passed the General Securities Representative Examination ("Series 7"), and is a General Securities Representative. Also, FINRA online records disclose that on August 18, 1993, Tibbs passed the Uniform Securities Agent State Law Examination ("Series 63").
By May 2013, Tibbs was associated as a GSR with PNC Investments, where he remained until August 2013. The AWC asserts that Tibbs had no relevant disciplinary history.
The Series 66
As a condition of his employment with PNC, Tibbs was required to take and pass within 120 days of his May 6, 2013 employment date the Uniform Combined State Law Examination ("Series 66"), which consists of 100 multiple choice questions subject to 2 hours and 30 minutes to complete. The Series 66 qualifies candidates as both securities agents and investment adviser representatives and is a co-requisite with the Series 7 for state registration. A score of 75% or higher is passing on the Series 66.
Fail
Accordingly, on June 21, 2013, Tibbs took the Series 66 examination but scored a failing grade of 28%. On June 24, 2013, Tibbs reported to PNC that he had failed the Series 66 examination.
On July 22, 2013, Tibbs again sat for the Series 66 and failed the examination with a score of 58%.
Failing But Less So
On July 23, 2013, Tibbs informed PNC that despite having failed the June 21, 2013, Series 66 examination with a score of 68%, he had improved his score on the July 22nd attempt with a 71% -- as such, Tibbs overstated his actual respective grades of 28% and 58%.
Apparently based upon Tibbs' misrepresentations of improving test scores falling just short of passing, PNC considered granting him a 120-day extension to pass the examination.
On July 26, 2013, Tibbs' supervisor requested that Tibbs provide supporting documentation for his claimed results on the June 21st and July 22nd examinations. On August 3, 2013, Tibbs provided falsified documents corroborating his earlier misrepresentations that he had scored 68% and 71%.
No Failure To Eject
According to online FINRA documents as of April 4, 2014, Tibbs voluntarily resigned from PNC on August 13, 2013, based upon allegations that:
DURING AN INVESTIGATION INTO THE DATES HE TOOK CERTAIN FINRA EXAMS AND HIS SCORES ON THOSE EXAMS, JOHN TIBBS RESIGNED SAYING THAT HE HAD LIED TO HIS MANAGER ABOUT HIS SCORES
In accordance with the terms of the AWC, FINRA imposed upon Tibbs a Bar from association with any FINRA member in any capacity.
Bill Singer's Comment
What's really left to say?
I can understand the first and even the second failure of the Series 66. After all, it had been something like two decades since Tibbs sat for one of these registration exams and he was probably more than a bit rusty when it came to studying and actually taking an online exam. Notwithstanding, a score of 28 ain't a 68, and a 58 ain't a 71 -- and although the second score of 58 was a marked improvement over the earlier 28, it was still quite short of the 75 needed to pass.
Was a 58% fail close enough to a 75% pass that PNC might have allowed Tibbs one more try? We will likely never know.
What we should keep in mind is that this was NOT a case in which a registered person pretended to have passed an exam; nor was this the worse case of fraudulently representing that a failing score was actually a passing one. In fact, nothing that Tibbs did was calculated to convince PNC that he had passed the exam -- and, as such, the public was never at risk of being serviced by an unqualified representative. Reduced to its essence, we have the circumstances of a veteran stockbroker who was likely embarrassed by his two failed exams and was trying to find a way to retain his job while gaining permission to sit for a third test. Did such an exercise in stupidity, vanity, and panic require the imposition of a Bar? Based upon what the AWC discloses, I don't think so; however, this was a settlement entered into by Tibbs and the issue of the fairness of the sanction was one for him to consider and, having done so and opted to accept a Bar, that question is now moot.
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