Charity Begins At Work For Suspended Registered Rep

October 24, 2017

The saying goes: Charity begins at home. For many employees, however, charity seems to begin at work. You got colleagues asking you to participate in an event against a disease or in support of a political cause, or to donate X dollars for every mile they walk.  At some jobs, the employer agrees to match various charitable donations or comps you for volunteering your time. Of course, try to do something nice and it inevitably attracts those among us who see an opportunity to make a few bucks  -- as a recent FINRA regulatory settlement demonstrates.

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, Respondent submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of [REDACTED], Respondent (AWC 2016050091705, October 19, 2017). NOTE: The name of the Respondent was REDACTED at the sole discretion of Blog after the original publication date.

The AWC asserts that Respondent was first registered in 1997 and in 2012 was registered with FINRA member firm Pruco Securities, LLC.  The AWC asserts that she has "no relevant disciplinary history."

In A Charitable Mood

The AWC asserts that through an affiliated company, Pruco had a matching gift program by which the firm matched employee donations to an approved charity and reimbursed employees for hours volunteered on behalf of the charity.

The AWC alleges that in March 2016, Respondent knowingly:
  • submitted a receipt for a $5,000 donation she never made; and
  • claimed reimbursement for volunteer hours she never performed.
Further, the AWC asserts that Respondent "intended to seek" a tax deduction for the false receipt.

The In-House Investigation

Pruco investigated Respondent's donation and volunteer-hours but what prompted the inquiry is not set forth in the AWC.  The AWC alleges that Respondent "initially lied to Pruco investigators about the fake donation and volunteer hours when questioned by the Firm."


Online FINRA BrokerCheck records as of October 25, 2017, disclose that Pruco Securities "discharged" Respondent on April 26, 2016, based upon allegations that:

Registered Representative ("RR") submitted, or allowed another RR to submit on her behalf (i) false information and a matching gift receipt to the Company, which matches qualifying charitable donations by employees for a charitable donation she did not make and (ii) false information to the Company regarding volunteer hours.

FINRA Sanctions

FINRA deemed Respondent's conduct to be inconsistent with high standards of commercial honor and just and equitable principles of trade, in violation of FINRA Rule 2010.
In accordance with the terms of the AWC, FINRA impose upon Respondent a $5,000 fine and a six-month suspension from association with any FINRA member in any capacity.

Bill Singer's Comment

I wish that FINRA had explained, even briefly, what prompted Pruco's internal investigation of Respondent's fraud. What tipped off the company to her bogus requests? Such information may help industry compliance staff to better spot such efforts and such miscreants.

Not quite sure why Respondent wasn't barred. She engaged in two distinct acts of fraud when she lied about making donations and also about volunteering her time. Thereafter, during her firm's investigation, she initially lied about her fraud. Doesn't exactly add up to someone who comes off as either honorable or trustworthy.

Maybe FINRA felt a bit vulnerable with imposing a longer suspension or bar on Respondent because the self-regulatory organization is aware of the many lies told by its large member firms to the public? You've probably read all that crap about how some large FINRA firms swore that they hadn't opened any bogus accounts, and then said it wasn't so widespread, and then said it was wider spread but they had the number, and then said that the number was actually a multiple of what they first thought it was. 

Oh, yeah, you're right, FINRA also has some large member firms that engaged in a lot of lying about toxic mortgages and student loans. 

Oh, sure, FINRA also has that stuff about its large firms engaging in rigging various rates and markets. 

Oh, I forgot, there are those regulatory settlements involving large FINRA member firms that fraudulently inflated their trade volume -- as in lied about how much business they were doing.

Hmmm . . . now I'm beginning to understand why Respondent only got a six-month suspension.