The failure of a registered individual to notify his or her member firm before engaging in a private placement or an outside business has long been commonplace in the industry.  The harsh penalties meted out by FINRA for such crimes violations, appear to be a more recent development.  These 8 cases were taken from FINRA's Disciplinary and Other Actions for October 2010.

1.  Registered Principal (St. Louis, MO) was barred ... for allegedly participating in private securities transactions  ("PP's") - sold nearly $2 million in ownership interests of an entity to individuals, including firm customers.  (FINRA Case #2009019006201)

2.  Registered Principal (Woodmere, NY) was fined $77.5K, suspended 9 months ... for allegedly participating in PP's (no $-amount given).  FINRA's OHO issued the initial decision;  NAC upheld the findings;  case now on appeal to the SEC. (FINRA Case #2005000835801)

3.  Registered Rep (Henderson, NV) was fined $60K, suspended 15 months ... for allegedly participating in PP's involving the purchase by firm customer of convertible debentures another company offered.  The RR first received a $50K finder’s fee and failed to provide the firm with prior written notice or receive the firm’s written permission.  He then completed and submitted firm compliance questionnaires, answering "no" to whether he sold any products or services not marketed through his firm.  He also provided incomplete information to the branch manager re: activities in the customer’s account.  (FINRA Case #2008013474801)

4.  Registered Rep (Murray, UT) was suspended 15 months (couldn't afford fine) ... for allegedly participating in PP's - he referred firm customers who purchased nearly $400,000 in promissory notes issued by a company.  He received a grand total of $15.6K from outside business activities and private securities transactions. (FINRA Case #2008015795401)

5.  Registered Rep (Evans, GA) was fined $20K, suspended 15 months ... for allegedly participating in PP's.  He too completed a firm compliance questionnaire stating that he understood he couldn't sell securities away from the firm and falsely represented that he had not engaged in unapproved transactions.  Apparently the RR omitted material information in connection with the sale of these securities, and failed to provide the customer with a stock certificate or receipt for the full amount of her investment.  Customer also complained to RR's member firm after the stock issuer ceased operations and liquidated its assets, and the firm settled the customer’s complaint.  The sale was unsuitable, to boot.   (FINRA Case #2007011919001)

6.  Registered Rep (Los Altos, CA) was fined $5K, suspended 3 months ... for allegedly holding outside brokerage accounts unbeknownst to his member firm.  He too falsely certified that he was in compliance with firm pols and procedures.  (FINRA Case #2008014479001)

7.  Registered Rep (Las Vegas, NV) was fined $5K, suspended 10 days ... for allegedly engaging in outside business activities - he and his wife formed an entity for holding rental property.  In a series of transactions, the entity loaned a total of $40,000 to a payday loan operation for which the entity received $8,000 in interest payments.  The RR had been introduced to the loan program by firm customers, and the entity, acting through Hughes, assigned its loan to a firm customer and did so at an $8,000 discount. (FINRA Case #2008012817301)

8.  Registered Rep (Monterey Park, CA) was suspended 12 months (couldn't afford fine) ... for allegedly participating in PP's - receiving about $260,000 for referring investors who purchased promissory notes and stock.  (FINRA Case #2008016435101)