FINRA Puts The Pedal To The Metal In Truck Sale Gone Bad

April 3, 2015

Supposing that you go to the nearby grocery store and buy a bunch of stuff and, oops, you realize on the way home that you had inadvertently put a package of gum in your pocket and forgot to pay for it. Now, assume that you're a stockbroker. Now, also assume that the owner of the grocery store is a customer of yours. Do any of the facts above suggest that your conduct should fall under scrutiny of one of Wall Street's regulators?  Sure . . . maybe it's a criminal matter for a local prosecutor. Maybe it's something to be worked out between you and the customer/store-owner. How does it escalate into a regulatory case?  Setting aside my hypothetical pack of gum scenario, consider today's Blog and ask yourself how the transaction wound up before FINRA -- and is this the best allocation of Wall Street's limited regulatory resources?

Case In Point

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 Alan Taylor submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Christopher Alan Taylor, Respondent (AWC  #20150441582, March 20, 2015

In 2008, Taylor entered the securities industry with FINRA member firm Edward Jones and was first registered in 2009. The AWC asserts that Taylor resigned from Edward Jones on December 15, 2014.

At times, I present you with a complicated fact pattern replete with my stunning analysis and brilliant commentary. Other times, it's a relatively short blog about a fairly mundane bit of regulation or litigation but there may be an important takeaway for my readers to consider. Today, however, well . . . I'm not really sure how to characterize this FINRA case, so, tell you what, here's an unedited quote from the AWC -- go ahead, knock yourself out:

On March 3,2015, during the course of an investigation into allegations that Taylor took possession of a truck from a Firm customer without paying for it, FINRA requested pursuant to FINRA Rule 8210, that Taylor appear and provide testimony on March 10, 2015. Pursuant to an email from Taylor's counsel to FINRA staff dated March 6, 2015, and by this agreement, Taylor acknowledges that he received FINRA's request and that he will not appear for on-the-record testimony at any time. By refusing to appear for on-the-record testimony as requested pursuant to FINRA Rule 8210, Taylor violates FINRA Rules 8210 and 2010. 

In accordance with the terms of the AWC, FINRA imposed upon Taylor a Bar from associating with any FINRA member firm in any capacity.

Bill Singer's Comment

Ummm . . . lemme see here, FINRA has jurisdiction as a Wall Street regulator over a matter in which a registered representative allegedly "took possession of a truck from a Firm customer without paying for it"?

Yeah, yeah, sure, I get the jurisdiction thing about  the OTR and FINRA Rule 8210 and all, but, keep in mind that the whole dust-up over Taylor's testimony was apparently predicated upon questions that FINRA wanted to ask him about his non-payment and driving-away-with an alleged customer's truck.  Too bad Bernie Madoff didn't drive off without paying for a truck -- if he had, maybe FINRA would have nailed him ten years earlier!

Last I looked, virtually every state in the Union has Grand Theft Auto laws that often come with a felony charge. Not a word is mentioned in the AWC as to whether the customer filed criminal charges against Taylor. Given the stark allegation in the AWC, a reader of the FINRA regulatory document could infer that Taylor "stole" the truck when he drove it away without payment.  In fact, such an inference may be way off base because the transaction at issue may simply involve a seller conveying a truck to a buyer but there's a misunderstanding about the terms and timing of payment. That latter scenario may result in allegations by the seller of breach of contract or various torts but not necessarily any criminal prosecution.

Frankly, I don't know what the hell was involved with the truck; and, more to the point, I really don't give a crap. FINRA, on the other hand, should give a damn because the self-regulatory organization is not only making a serious allegation against Taylor but it sort of has an obligation to inform the public as to whether or not there were any criminal charges filed and whether the seller and buyer subsequently came to an understanding -- or not. 

When all is said and done, you'd sort of think that Wall Street's self-regulator would have far more important things on its plate and far worse desperados to pursue than a registered rep who appears to have gotten himself embroiled in the disputed purchase of a truck. I just hope that the diligent cops walkin' the Wall Street beat at FINRA aren't planning on investigating stockbrokers who are driving the "Liberator" monster truck in the "Grand Theft Auto" video game.