FINRA Suspends Unregistered Female for Following Registered Male Rep's Orders

September 7, 2021

Take a woman. Put her in a relatively low-level Wall Street job. Put her in a position where she's more likely to fail than succeed. Put her in situations where she either follows orders or else. Then enlist an industry regulator to pretend that everything this vulnerable woman did was on her own volition. After you've blindfolded justice and stuffed her ears, impose sanctions on this same woman in the guise of Wall Street regulation. Despicable. Shameful. Then again, it's how things work on the Street. Certainly, it's part of FINRA's tawdry record of failing to confront sexism,  racism, and discrimination/harassment in the industry.

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, Leigh S. Johnson submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Leigh S. Johnson, Respondent (FINRA AWC 2020065293202)

The AWC asserts that by January 22, 2020, Johnson was associated with Kestra Investment Services, LLC as an Non-Registered Fingerprint ("NRF") employee until the firm terminated her association on March 18, 2020.

An NRF Employee

An NRF employee? In the FINRA community, an NRF is pretty much viewed as just another "body." After all, the duties of an NRF are so menial and clerical as to not require registration. Funny thing about NRFs is that they often tend to be women. Go figure, right? Then again, Wall Street always seems to find the right spot for females in the industry: secretaries, receptionists, back-office drones, Director of Human Resources -- you know, about every job that doesn't pay a commission and doesn't quite involve earning the big bucks. See for example:

Another Office Girl Gets Slammed By FINRA ( Blog / July 29, 2021)

Sexism On Wall Street: New Chapter, Same Book ( Blog / February 8, 2019)

Wall Street's history of sexual discrimination and harassment should be -- must be -- known to many of the members of FINRA's Board of Governors. After all, some of them campaigned for election citing that very issue and promising to champion the cause of inclusion. When interviewing for the very position of FINRA's Chair, Eileen Murray was embroiled in her own case involving alleged sexual discrimination "Former Bridgewater Co-CEO Eileen Murray Settles Pay Dispute With Hedge Fund  / Her suit alleged the fund was withholding as much as $100 million in deferred compensation" (Wall Street Journal by Juliet Chung / Oct. 5, 2020)

Former Bridgewater Associates co-Chief Executive Eileen Murray has settled her pay dispute with the world's largest hedge fund, she said Monday.

Ms. Murray had filed suit against Bridgewater in July, alleging it was withholding up to $100 million in deferred compensation because she disclosed to a third party that she had a gender-discrimination dispute with the hedge fund. The suit described Ms. Murray as having claims against Bridgewater "based on gender discrimination, unequal pay, and breach of contract." . . .

At The Direction of Representative A

Returning to FINRA's regulatory case against NRF Johnson, the AWC alleges that:

While associated with Kestra, Johnson functioned as the administrative assistant for Representative A. At the direction of Representative A, Johnson created email accounts, including email addresses and passwords in the name of three Kestra customers. Johnson used each of the customers' dates of birth to create the email accounts and fashioned email addresses for each account based on the customers' first and last names. 

Johnson provided the email addresses and passwords to Representative A, based on Representative A's representation to Johnson that he was trying to help the customers access account statements for brokerage accounts that the customers held away from Kestra. The customers did not authorize Johnson to create email accounts on their behalf, and they were unaware she had done so. Indeed, Johnson never discussed the email accounts with the three customers or provided the customers with the log-in information for the accounts. 

Therefore, Johnson violated FINRA Rule 2010. 

at Page 2 of the AWC

FINRA Sanction

In accordance with the terms of the AWC, FINRA imposed upon Johnson a 15-calendar-day suspension from associating with any FINRA member in all capacities. In light of Johnson's financial status, FINRA declined to impose a monetary sanctions.

Bill Singer's Comment

The AWC euphemistically characterizes NRF Johnson's job "as the administrative assistant for Representative A." I didn't write that. I didn't come up with that somewhat insulting job description. Be that as it may, for those of us Wall Street veterans, we know that, more likely than not, for better or worse, NRF Johnson was called one of the "office girls." Get your girl to do it. Why are you doing this when you have a girl? A generation or so ago, folks used to refer to some men, usually minorities, as "boys," but that pejorative seems to have fallen out of favor -- odd, isn't it, that girl still hangs in there. It would be an interesting FINRA study to see what percentage of NRFs are women and minorities but, gee, FINRA funds so many worthless studies that this particular issue likely would be deemed too unsettling and probative; see,  for example "Dubious FINRA Study Finds Female Arkansas Prison Inmates Are Usually Poor And Financially Illiterate" ( Blog /  July 24, 2020)

What caught my eye in the Johnson AWC was this critical, all-important phrase:

At the direction of Representative A, Johnson created email accounts, . . .

FINRA concedes that Johnson didn't engage in that litany of email misconduct on her own volition, but, to the contrary, at the DIRECTION of her immediate boss, Representative A. Far from being clueless and a mere spectator, Representative A directed Johnson to create the email accounts at issue, and the AWC further concedes that he used email addresses and passwords that were provided to him by Johnson. Representative A told Johnson what to do, and then he benefited from the fruits of her directed labor. You'd sorta think that FINRA might have asked the all-important question: What would have happened to NFR Johnson if she refused to follow Representative A's directions? In my opinion, it's doubtful that Johnson would have remained employed at Kestra if she had refused to follow Representative A's directions. 

As to the "Respondent A" references in the AWC, why doesn't FINRA name the rep? After all, he is responsible for setting this mess in motion. Isn't this a scenario where there is a compelling reason to name the name of the rep who gave the directions that put the NRF in a position to be fined and suspended (but FINRA opted not to impose the fine)? To be fair, FINRA does tell us a smidgeon about Representative A in Footnote 1:

FINRA previously barred Representative A from associating with any FINRA member firm in all capacities for refusing to appear for on-the-record testimony that was requested pursuant to FINRA Rule 8210. 

In closing, I would urge you to consider that FINRA suspended Johnson for 15-calendar-days based upon the self-regulatory-organization's allegation that she had violated FINRA Rule 2010.

SIDE BAR: FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade

A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.

Frankly, the Johnson AWC is a shameful failure by FINRA itself to observe high standards of commercial honor and just and equitable principles of trade when it comes to acknowledging the harsh realities facing many women employees who toil away at the member firms. The Johnson AWC is a disgrace because it is premised upon a willful blindness to the challenges faced by many of the industry's lower-level employees, who are overwhelmingly women and/or minorities.