October 7, 2017
Another day and another former FINRA registered rep throws in the towel and accepts a regulatory settlement imposing a Bar. Given the facts set forth in the settlement agreement, there isn't much to argue about. The rep refused to cooperate in a FINRA investigation. You go down that path and it's pretty obvious that your trip will end in expulsion from the biz, as should be the case. Given the extreme sanction of an industry Bar for non-cooperation in a FINRA investigation, however, a self-regulatory-organization has an obligation to at least offer sufficient content and context to explain why it needed to investigate the rep in the first place. In reading through today's featured FINRA regulatory settlement, it appears to have involved an investigation prompted by customer complaints pertaining to a $25,000 investment in collectible medals. Except . . . no matter how many times you read through the AWC, there isn't a single assertion that any customer complained to anyone about anything. READ
During my career as a lawyer handling regulatory matters, both as a former regulatory lawyer and in private practice, I have come across a somewhat common fact pattern in which an associated person is caught in a rancorous divorce and has moved out of the marital abode. The spouse who remains in the family's home may decide to rip up all sorts of important legal, regulatory, and billing notices sent in the mail to the soon-to-be-former spouse. That's one example of why FINRA notices don't always get through.
Similarly, think of an individual whose home is destroyed by a fire or natural disaster, as has been the case with the recent hurricane season. This dispossessed individual can't get to a local post office (which may be closed or destroyed) to post change of address forms. This individual may not even have a working cellphone or computer with which to log-on and make address changes. This individual may be living in a motel or Red Cross shelter and caring for ill or elderly folks. By the time life returns to normal, this individual may simply have moved on, found another job, and forgotten about the need to update CRD or arrange for an address change with FINRA.
Under some extraordinary circumstances, the good folks at FINRA have empathy, sympathy, and compassion, and they may re-open a matter where an associated person had failed to timely reply to demands for information. Unfortunately, FINRA isn't always quick to reconsider its actions, which means that you better be mindful of your obligations to update your address and to timely respond to regulatory demands. READ http://www.brokeandbroker.com/3609/nasd-finra-sec-bar/
Most Wall Street registered reps didn't quite hear the bit after the "till death do you part" portion of their wedding vows where they were also asked if they took the Financial Industry Regulatory Authority as their lawfully wedded self-regulator. If they had listened carefully, they would have heard it; particularly when they were told that they could kiss the bride and, thereafter, plant a big, fat, wet one on FINRA's lips. Yuck! In any event, as a recent regulatory settlement shows, FINRA is in bed between a registered and unregistered spouse. READ http://www.brokeandbroker.com/3608/finra-borrowing-elderly/
In the game of golf, if you sort of whiff during a friendly game and the ball moves a few inches, depending upon how "friendly" your friendly game is, your pals may give you a "mulligan" -- which amounts to a do-over or a second shot without the penalty of the first. In the game of chess, there's that "Touch-Move" rule that says that once you touch your piece, you must move it and no amount of begging, pleading, or arguing allows you to take the move back.
After a Respondent had signed on the dotted line of a FINRA Acceptance, Waiver and Consent settlement, he had second thoughts -- or, as he would argue, FINRA reneged on the understanding that he and the regulator had entered into. If he had been playing a game, he may have asked for a mulligan or denied that he had "touched" a piece. The thing is, though, that he was not on the Back Nine or playing a board game. No . . . this was dead serious and what was at stake was his ability to pursue his profession. READ http://www.brokeandbroker.com/3607/sec-finra-awc/
Among the BrokeAndBroker.com Blog's most frequently reported Financial Industry Regulatory Authority ("FINRA") issues is the finding that the failure to disclose a reportable event was "willful." That willfulness finding often seems inconsequential because it may accompany sanctions of, say, a $5,000 fine and a 30-day suspension. As such, many registered representatives view the tag of "willful" as merely so much regulatory gibberish. The conventional wisdom around the old water cooler is that you pay the fine, you do the time, and, no big deal, when the suspension is over, you go back to work. Except you can't go back to work! Once labelled with the finding of willfulness, the failure to disclose likely renders the Respondent as statutorily disqualified from further participation in the industry, and may have collateral effects on other professional roles and business endeavors.
BrokeAndBroker.com Blog's publisher Bill Singer, Esq. has prepared a comprehensive analysis of a case in which the failure to timely disclose tax liens resulted in the disqualification of the Respondent by FINRA and the sustaining of that decision on appeal by the Securities and Exchange Commission. Bill does not question or debate the various allegations or findings in the article because he wants to ensure that readers understand the significant consequences of late- or non-disclosures of reportable events. As such, today's blog is offered as a road map whose journey starts with the internal debate about whether or not you should suffer the embarrassment of disclosure and ends with your arrival at industry disqualification. Given that statutory disqualification is often an unknown consequence for many who go through the struggle between filing a report or not saying anything, Bill hopes that you are now alerted by the flashing red lights warning you about taking this career-threatening detour. READ http://www.brokeandbroker.com/3606/elgart-tax-liens/