During the dire days of World War II, British Prime Minister Winston Churchill said:
Never give in, never give in, never; never; never; never - in nothing, great or small, large or petty - never give in except to convictions of honor and good sense.
Former Wells Fargo Advisors LLC's ("WFA") registered representative Denise Lynn Gizankis took Churchill's admonition to heart.
FINRA Bar
On January 25, 2011, Gizankis filed an application for review of a Financial Industry Regulatory Authority ("FINRA") disciplinary action, which had barred her for failing to respond to a request to provide information in connection with her termination from Wells Fargo. In seeking to have the Securities and Exchange Commission ("SEC") set aside FINRA's bar, Gizankis explained that because she recently relocated to another state, she had not received FINRA's demands for the production of information or the subsequent suspension notices that resulted in her Bar.
FINRA's records reflect that it first suspended Gizankis for non-compliance with its demands for information on October 21, 2010, and, thereafter, barred her on December 30, 2010.
SIDE BAR: FINRA Rule 9552 provides that FINRA may suspend a person subject to FINRA's jurisdiction who fails to provide information and that, if the person subsequently fails to request termination of the suspension within three months, that person will be automatically barred.
FINRA Rule 8210 requires persons associated (or formerly associated) with a member firm to provide information with respect to any matter related to an investigation, complaint, or proceeding.
All's Well That Ends Well
On March 16, 2011, FINRA filed with the SEC a "Motion to Dismiss Application for Review and to Stay Briefing Schedule." In that motion, FINRA stated that Gizankis's application for review included "information responsive to FINRA's information requests." Not only did Gizankis provide whatever information FINRA had initially been seeking, but she apparently demonstrated that there were "extraordinary circumstances that made her unavailable."
In consideration of Gizankis's ultimate compliance with FINRA's Rule 8210 demands and the extraordinary circumstances that caused the tardy response, FINRA entered into a Letter of Acceptance, Waiver, and Consent, that settled the matter "for a sanction less than a Bar." (NOTE: The SEC's Decision does not detail what that lesser sanction was).
Given that the issues in dispute are now rendered moot, the SEC dismissed Gizankis's application for review. In the Matter of the Application of Denise Lynn Gizankis for Review of Action Taken by FINRA (Order Dismissing Petition for Review, Securities Exchange Act Of 1934 Rel. No. 64391 / Admin. Proc. File No. 3-14206, May 4, 2011).
Bill Singer's Comment: Having worked as a lawyer for two self-regulatory organizations and as a defense lawyer, I know that most of these non-response cases are what they are - individuals who are in trouble simply refuse to reply, foolishly believing that the matter will simply go away if they don't answer. In such cases, a significant suspension or Bar may well be warranted.
On the other hand, there are many situations where individuals simply do not recieve mailed notices or have replied and their communication is lost in transmission. In far too many of these situations, the regulators refuse to exercise reasonable discretion and jam up the system with the silliness that is evident in Gizankis. One can only imagine the wasted time and legal expenses imposed upon Gizankis, FINRA, and the SEC to process this appeal when a simple waiver from FINRA months earlier could have achieved the same outcome.