Tag Archives: FINRA

FINRA Sanctions Three Firms for Inadequate Supervision of Consolidated Reports

Written by: Robert Heim

The Financial Industry Regulatory Authority (FINRA) announced today that it has sanctioned three firms – H. Beck, Inc., LaSalle St. Securities, LLC, and J.P. Turner & Company, LLC – with fines of $425,000, $175,000 and $100,000, respectively, for inadequate supervision of consolidated reports provided to customers and other violations. A consolidated report is a single document that combines information regarding most or all of a customer’s financial holdings, regardless of where those assets are held.

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FINRA Settles Matter Against Registered Representative For Failing to Timely Amend his Form U4 to Disclose Misdemeanor Charge, State and Federal Tax Liens, and Civil Judgment

Written by: Robert Heim

FINRA settled a matter involving a registered representative who failed to timely amend his Form U4 to disclose a misdemeanor charge, state tax lien, federal tax lien and civil judgment. In June 2009, the Commonwealth of Pennsylvania’s Department of lnsurance filed a criminal charge against the representative in the Court of Common Pleas of Montgomery County, alleging that the representative paid “an unlicensed person commissions from the sale of fixed insurance products between 2005 and 2007.” In August 2010, the Commonwealth of Pennsylvania filed a tax lien against the representative in the amount of $18,687 for unpaid taxes in 2005, 2006 and 2007. In October 2011, the Internal Revenue Service (IRS) filed a tax lien against the representative in the amount of $50,220 for unpaid taxes in 2005, 2006 and 2007. Finally, in January 2013, the representative was the subject of a civil judgment in the amount of $35,157.

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FINRA Wants Barred Brokers Out of Insurance Too

Written by: Robert Heim

FINRA is trying to keep banned registered securities representatives, or brokers, from using a loophole that lets them continue selling financial products to members of the public as authorized insurance agents, The Wall Street Journal reports.  FINRA – the U.S. securities industry’s self-regulatory agency – will “begin providing to state insurance regulators a monthly report of its disciplinary actions against securities brokers,” the newspaper says. For now, FINRA sends the report only to state securities regulators, who don’t always communicate with the insurance watchdogs down the hall.  The Journal says its reporters “recently reviewed securities- and insurance-industry records for 395 brokers who in 2013 were permanently banned by Finra from the securities industry.” From this survey, it found that “at least 13% of the barred brokers still retain their insurance licenses” as of December 1, 2014.

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Legal Developments in Securities Law

FINRA Settles with the SEC: Accused of Doctoring Documents

Today, FINRA settled civil charges by the SEC which stemmed from accusations that FINRA had doctored certain documents requested by the SEC. The Wall Street Journal reported:

According to the SEC, the director of Finra’s regional office in Kansas City altered in August 2008 the minutes of three internal staff meetings, editing or deleting certain information hours before providing the “inaccurate and incomplete” documents to the SEC’s inspection team.

The Finra director wasn’t identified in documents released by the SEC on Thursday. The SEC said the person resigned in 2010 after the alleged offenses were exposed.

The 2008 incident was the third time in eight years that an employee of Finra or predecessor the National Association of Securities Dealers provided altered or misleading documents to the SEC, it said. See article here.

The settlement provides, in part, for remedial measures, such as educating its staff members on “document integrity.”

Interestingly, in August of this year, an SEC employee accused the SEC of destroying thousands of documents concerning investigations into Wall Street banks and hedge funds. The SEC countered that it follows a system of periodically destroying documents, which does not violate any securities laws or policies. See the Wall Street Journal article from August here.

Regardless of the merit of the accusations against these agencies, individuals subject to SEC or FINRA inquiries can take a lesson from these headlines. Individuals who are the subject of an inquiry by the SEC or FINRA should ensure that they maintain copies of any information provided to the agencies and never alter any documents in an investigation. Providing complete and accurate information to a watchdog can be a difficult task, but an experienced attorney can guide you through the process and help you ensure that you are in compliance with securities laws.

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