Accessing FINRA Test Center Launch Codes With Colonel Mustard

October 26, 2022

A non-registered fingerprint person -- a lowly NRF -- took a 15-minute break during her Series 7 examination. It's what happened during those 15 minutes that got her fined and suspended by FINRA. FINRA's regulatory settlement with the NRF is now posted on FINRA's public database for all to see. If you have a 15-minute break sometime during the day, have some fun and log on to FINRA's website and read the settlement document. See if you can find the words in FINRA's allegations that specify exactly what the NRF did that constituted a violation. Don't guess. Don't infer. Don't assume. Just write down what FINRA published as proof of the NRF's alleged misconduct. I can't find the words in the document. In fact, they're just not there. 

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, Deborah Alonso submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted.

An NRF Fined and Suspended

The AWC asserts that Alonso entered the industry in May 2021 as a non-registered fingerprint person ("NRF") with Goldman Sachs & Co. LLC,, where she remained until September 2021. In accordance with the terms of the AWC, FINRA imposed upon Alonso a $5,000 fine and an 18-month suspension from associating with any FINRA member in all capacities. 

Testing Center Referral

The AWC asserts that the "matter originated with a referral from a testing center that was filed with FINRA's Credentialing, Registration Education, and Disclosure Department." As to the nature of the matter, the AWC asserts that:

Alonso took the Series 7 General Securities Representative examination on September 16, 2021. Prior to the examination, Alonso attested that she read and would abide by the Rules of Conduct for representative and principal examinations, which, among other things, require candidates to store all personal items in the locker provided by the test vendor and prohibit accessing, using, or attempting to use any personal items, including notes or study materials, during the examination. During an approximately 15-minute unscheduled break, Alonso had access to study materials that she left in the restroom prior to taking the examination. Therefore, Alonso violated FINRA Rules 1210.05 and 2010. 
Bill Singer's Comment

No . . . I'm not going to justify or defend cheating on a registration examination; however, I'm not quite sure what this AWC is alleging that Alonso did in terms of violating FINRA Rules. What I am sure of is that Alonso was a lowly NRF and even going by all of FINRA's allegations, an 18-month suspension for what she purportedly did seems like overkill. But, okay, maybe that's just me and maybe I'm getting soft after a few years of the Covid pandemic and a looming recession -- and what the hell happened to my New York Mets this year? 

According to the allegation in the AWC: "Alonso had access to study materials that she left in the restroom prior to taking the examination." Let's focus on three aspects of that allegation: 

  1. Alonso had access to study materials 
  2. Alonso left said study materials in the restroom PRIOR to taking the Series 7 examination; 
  3. Alonso took "an approximately 15-minnute unscheduled break."
1. had access

As I read the AWC, it alleges that Alonso "had access" to study materials but not that Alonso "accessed" study materials. Accordingly, the AWC asserts that Alonso was in close enough proximity to the study materials that, if she wanted to read them, she had access to them in order to accomplish her intention. Notably, pointedly, there is no allegation whatsoever in the AWC that Alonso accessed the study materials. 

There is a world of difference between accusing someone of "accessing" something and saying that they "had access" to the same thing. The President of the United States may have access to the launch codes for nuclear weapons but that's quite different from saying that he accessed the codes, launched missiles, and set off a nuclear war. Imagine if Alonso had access to the self destruct device for the FINRA Series 7 exam center!

2. in the restroom prior to taking the examination

After informing us that Alonso had access to study materials, the AWC then asserts that she had left those materials in the restroom. Okay, fine -- she could have left the materials in a locker, she could have left the materials in a garbage can on the street, she could have thrown the materials out the window. For all we know, Alonso had abandoned her study materials in the last convenient place available (the restroom) before entering the test room. Regardless of the myriad of possibilities about where Alonso could have left her study materials, it appears that she opted for a restroom. Notably, she left the materials in the restroom prior to entering the examination room where she would physically sit down and take her Series 7 examination. As such, we got Alonso sitting in a room taking her exam and we have her study materials in a restroom.  

Perhaps, Alonso gave her study materials one, last, quick review in the restroom and then left them there. I can remember taking the Bar exam and showing up at the test center with no study materials; however, I still remember those poor, frenetic souls who were still cramming in the hallway up to the last minute before they had to show their identification and enter the testing center. In case you were wondering, I passed the Bar on my first try -- so there!

3. 15-minute unscheduled break

In making its case against Alonso, FINRA alleged that she took about a 15-minute unscheduled break. Okay, so, let's see: There are scheduled breaks and unscheduled breaks. What kind of "unscheduled" break did Alonso take? Without fabricating facts not in evidence, I want you to cite to me the language in the AWC that explains why Alonso took an unscheduled break, where she went on the break, and what she was observed doing during the 15 minutes in which she went on and then came back from the break. Did she have severe allergies and asked permission to step into the hallway, blow her nose, take an allergy pill, and a sip of water from the water cooler? Did she have a splitting headache and stepped outside to take an aspirin? Did she have a back spasm and needed to get up and stretch. I could go on asking you questions but what's the point, right? The exam was in 2021, as in during the Covid pandemic: was Alonso recovering from a bout of Covid and needed to step outside for a sip of water? The answer as to what Alonso did during her 15-minute unscheduled break should be -- must be -- set out with clarity in the AWC. After all, it's what she did during those fateful 15 minutes that got her fined and suspended. So . . . just write down the specific words of allegation from FINRA's AWC and let me know what Alonso did to violate a rule or regulation warranting a $5,000 fine and an 18-month suspension.

What I find absolutely shocking and odd is that there is no allegation in the AWC that Alonso accessed her study materials in the restroom during the break. Moreover, there is no allegation that any test-center proctor saw her doing as much. You may "think" whatever you wish as to what happened during the 15-minutes at issue but it would be nothing more than unsubstantiated conjecture. Re-read the AWC and you will note that it merely alleges that Alonso had "access to study materials," but doesn't actually go a step further and state that she accessed the materials or that anyone saw her doing as much. As best I can tell, the charge against Alonso is that she had agreed to "store all personal items in the locker" but in the case of said study materials, "Left [them] in the restroom prior to taking the examination."

Solely going by the AWC's signature page, it does not appear that Respondent Alonso was represented by legal counsel. In part, that may explain why FINRA didn't quite say what it meant or meant what it said because, y'know, there was no lawyer representing Alonso and maybe we can strong-arm some unrepresented NRF into signing off on this. It is outrageous that FINRA failed to set out the specifics of Alonso's alleged misconduct in the very settlement document that she has signed and will now be posted and published for all to see on FINRA's website. All of which reduces the Alonso AWC to a board game of Clue in which we first guessed that it was Colonel Mustard with the revolver in the Conservatory but were wrong. Our next guess was Respondent Alonso in the restroom with the study materials. I'm still not sure if that's the right answer.