Another Wall Street Fall Girl Takes A FINRA Flop

September 25, 2015

As best I recall, just over 50% of the population of the United States is female. I'm not quite sure of the actual 2015 statistics, but I'll bet you that about half of the staffing on Wall Street is female -- and we're talking stockbrokers, traders, back-office, support, commissioned, and salaried folks. I'll also bet you, however, that if you were to plot a scatter-gram of the total compensation paid to the financial services industry's women versus men, you would immediately note that women largely cluster around the lower-paying range and men cluster around the higher.  If there is a salaried position, it's likely staffed by a woman. If there is a higher-paying commission position, it's likely staffed by a male. Which is not to say that there aren't men getting salaries on the low-end or women sitting in C-Suites with seven-figure packages. There are. But what we're talking about here are not the exceptions but the culture. Go visit any broker-dealer branch and count the number of stockbrokers who are women versus men. For a completely unscientific study, consider the search results in Google Image for "stockbrokers."

Today's Blog presents an example of how Wall Street places far too many of the industry's women in awkward circumstances that frequently result in regulatory and compliance violations. Which makes you wonder why the industry and its regulators seem oblivious to the consequences of such sexist policies and practices.

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, Penny Gail Flippen submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Penny Gail Flippen, Respondent (AWC 2013036068202, September 16, 2015).

In 1997, Flippen entered the securities industry and first became registered in 1998 with FINRA member firm H.D Vest Investment Services. During her tenure at the firm, Flippen served as a registered sales assistant and office manager. The AWC asserts that Flippen voluntarily resigned from H. D. Vest in September 2013. Further, the AWC asserts that Flippen had no prior relevant disciplinary history in the securities industry.

Role Playing

The AWC asserts that during March 2006 to September 2013, Flippen was employed at a branch which appears to have been run by an individual referred to only as "R.W," who purportedly handled all of the branch's customer accounts, analyzed the accounts' holdings, and made all investment recommendations to the branch's customers. 

According to the AWC, Flippen's role was to handle the customer service for the branch's accounts although she occasionally placed trades for customers pursuant to RW's instructions. Pointedly, the AWC acknowledges that Flippen did not personally make investment recommendations to any customers and she did not transact any business with customers. As to the compensation arrangements for the branch, the AWC asserts that "RW received all commissions on customer trading, and paid Flippen a straight salary with occasional bonuses."

A Matter Of Substitution

The AWC asserts that from January 2006 through November 2009, RW made multiple attempts to register in certain states but his history of multiple customer complaints precluded his registration, which H.D. Vest withdrew in response to the states' concerns and, thereafter, the firm submitted registration applications for those states on behalf of Flippen. The AWC concedes that: 

Flippen admittedly only registered in the States because RW was unsuccessful in obtaining his registrations.

Upon being duly registered in the states that had rejected RW's applications, Flippen received the transfer from RW of nine customer accounts for residents of the states that had declined to accept RW's registration. H.D. Vest's trade blotter and account statements reflected Flippen as the servicing registered representative for those accounts in those states. The AWC asserts that:

in fact, RW was the true registered representative. As a result, Flippen caused the Firm to maintain business records that were inaccurate, in that they falsely indicated that Flippen was the representative of record on and responsible for the recommendations made with respect to the Nine Accounts when, in fact, RW made the investment recommendations and received all the commissions generated by the trades, thus the true registered representative of these accounts.''

Violations and Sanctions

FINRA deemed Flippen's conduct to constitute violations of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 promulgated thereunder; NASD Conduct Rule 3110(a); FINRA Rule 4511(a); and FINRA Rule 2010.

In accordance with the terms of the AWC, FINRA imposed upon Flippen a $5,000 "deferred" fine and a 30-business-day suspension from association with any FINRA member,

Bill Singer's Comment

Online BrokerCheck records as of September 25, 2015, disclose that on May 15, 2013, H.D. Vest received a customer complaint against Flippen in which the allegation was


The online record notes that no damages were specified by the customer but that the firm's good-faith determination valued the alleged damages as greater than $5,000. As of July 2, 2013, the firm had denied the claim and there is no further indication of any lawsuit or settlement.

A second BrokerCheck event discloses that a FINRA Arbitration Complaint was filed naming Flipper on June 26, 2012, and alleged that:


The online record notes that no damages were specified by the customer but that the firm's good-faith determination valued the alleged damages as greater than $5,000. As of September 25, 2014, the firm had settled the claim for $125,000 but Flippen did not contribute to that monetary settlement.

I am inferring from the absence of a lawyer's signature on behalf of Flippen at the end of the AWC that she represented herself. I would also note that this is yet another in a long-line of FINRA regulatory cases in which a "sales assistant" -- almost always a female -- seems to have become the "fall girl." Please read the articles posted at the end of this blog for more details about this sexist aspect of Wall Street. 

Flippen spends 15 years in the biz as a registered person but, go figure, she only manages to rise to the relatively low-level status of a "sales assistant" and office manager. I say low-level because the AWC asserts that all the branch commissions were paid to RW, who then doled out to Flippen a salary with occasional bonuses. 

No one ever seems to have wondered why Flippen wasn't given her own accounts to handle. No one seems to be troubled by the likely dynamic afoot which places far too many of Wall Street's females in jobs dependent upon straight-salary-with-occasional-bonuses

You ever walk into a broker dealer branch office and see a male receptionist? 

You ever wonder how many registered males with 15 years experience would still be compensated via straight salary with occasional bonuses?

Am I the only industry veteran who understands that salary with occasional bonuses makes for overly pliant employees, who are dependent upon their bosses largesse? 

Am I the only industry veteran who knows that such a system of dependency institutionalizes a culture where female underlings are told to look the other way, asked to hold their noses, requested to do something wrong, and frequently told to keep their mouth shut?

If it's a choice between calling Compliance or Legal, or getting that year's occasional bonus, what the hell do you think is generally going to happen?