FINRA Sanctions UBS Employees for Altered Records Part 1

November 24, 2014

Get a cup of coffee. Find yourself a nice donut. Okay . . . now, sit down and make a modest investment of your time. This is a three-part Blog with a bit of a surprise ending. By way of spoiler alert: FINRA settled chargesinvolving records that were altered during an in-house audit at UBS. It's not so much what's said by FINRA about this misconduct that has Bill Singer apoplectic (after all, it doesn't take that much to get Bill upset), it is what is not said by FINRA that underscores so much of the nonsense and silliness that has become Wall Street regulation.

The Santiago AWC

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, Christopher Michael Santiago submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Christopher Michael Santiago, Respondent (AWC #2013035537603, November 17, 2014).

In 2006, Santiago entered the industry as a Marketing Associate with FINRA member firm UBS Financial Services Inc. and in March 2011, he was promoted to Director and Marketing Manager at UBS. The AWC asserts that Santiago had no prior formal disciplinary history with the Securities and Exchange Commission, any self-regulatory organization or any state regulator.

The UBS Branch Audit

The AWC asserts that UBS staff was auditing one of its branches in November 2012, and had asked for, among other items, copies of marketing materials used by registered representatives for client events. Apparently a Branch Control Officer, who was also a member of UBS's compliance group, realized that some of the requested materials were missing necessary information, including disclosures; and, thereafter, the unnamed Branch Control Officer (identified in the AWC only as "SC") contacted Respondent Santiago and asked that he add the missing information.

According to the AWC, Santiago understood that the altered marketing materials would reviewed as part of the audit but, nonetheless, complied with the Branch Control Officer SC's request. As a result, the AWC alleges that the audit staff believed that they had marketing materials as originally prepared and maintained at the subject branch.

SIDE BAR: This is a direct quote from the Santiago AWC:

[A]s the audit progressed, SC, a Control Officer at the branch who was a member of the Firm's compliance group, became aware that some of the requested marketing materials were missing necessary information, including certain disclosures. SC contacted Santiago and asked him to add the missing information to the marketing materials. Santiago understood that the altered marketing materials would be used in conjunction with the branch audit. . .

Fine and Suspension

According to the AWC, Santiago was terminated by UBS on December 7, 2010.

FINRA deemed Santiago's conduct to constitute a violation of FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Santiago a $5,000 fine and a 45- calendar-day suspension from association with any FlNRA member in any and all capacities.

Bill Singer's Comment

Who the hell is "SC, a Control Officer at the branch"? To be clear, very clear, there is not a single reference to the name of the Branch Control Officer or to another FINRA AWC pertaining to that officer or to any other individuals possibly linked to the underlying facts in Santiago's AWC. Alas -- Wall Street's largest self-regulatory organization doesn't seem to think that we need to know that. So much for content and context.