Registered reps caught lying and failing to disclose were severely disciplined by FINRA during Q2 of 2011.  Their violations fell into these 8 categories (read stories 5-8 after the jump;  see 7/25 post for stories 1-4):

1. Failure to Provide Written Notice of an Outside Brokerage Account.
2. Private Securities Transactions and Outside Business Activities.
3. Willful Failure to Disclose Criminal History on Form U4.
4. Misrepresentative and Unbalanced “Tweets” and Other Misconduct.
5. Creating and Distributing Continuing Education Answer Key.
6. Effecting Transactions in a Personal Account With Insufficient Funds.
7. Backdating Annuity Applications.
8. Improper Borrowing From Customers.

5.  Creating and Distributing Continuing Education Answer Key. An RR, who was an external wholesaler of a universal life insurance policy with longterm care benefits, created and distributed a continuing education answer key for continuing education (CE) courses and CE exams that certain states initiated in 2008.  The RR created the answer key right after taking the course and exam in July 2008.  The RR sent the answer key to 2 other RR's in his firm and a portion of the answer key to 1 outside financial advisor.   For violating NASD Rule 2110 (ethical standards) and FINRA Rule 2010 (ethical standards), the RR got a $5K fine and 60-day suspension. 6.  Effecting Transactions in a Personal Account With Insufficient Funds. An RR effected transactions in his personal account at his employer firm for which he didn't have sufficient funds.  The personal account was opened In December 2007 and, in the next 15 months (through March 2009), he effected 88 transactions in that account - including checks, debits and ATM withdrawals totaling about $11,000.  The RR did these transactions even though he knew or should have known that he didn't have sufficient funds to cover them.  For violating NASD Rule 2110 (ethical standards) and FINRA Rule 2010 (ethical standards), RR was barred from the industry. 7.  Backdating Annuity Applications. An RR backdated annuity apps and acknowledgement forms for 23 clients between January and March 2009.  By doing so, he provided the clients with higher interest rates on the annuity contracts than the annuity company was offering.  The RR backdated the  documents to make it appear as if the customers had signed the paperwork on a date when the interest rate the annuity company offered was higher than the interest rate it offered when the RR actually sold the contracts.  For violating FINRA Rule 2010 (ethical standards), RR got a $5K fine and 9-month suspension. 8.  Improper Borrowing From Customers. An RR failed to notify her member firm that she:  (i) served as president of a jewelry company;  (ii) served as a translator for a forex trading firm;  (iii) held financial interests or trading authority in multiple brokerage accounts away from the firm;  (iv) falsely represented on outside brokerage account applications that she wasn't  affiliated with a brokerage firm;  (v) created websites related to the firm without getting prior firm approval;  (vi) failed to notify the firm that she sometimes touted stocks on her Twitter account and “tweeted” unbalanced stock recommendations that failed to disclose material information. As it turned out, the RR had earned remuneration in 2007 and 2009 for the translator and jewelry positions.  She also had opened or maintained at least 13 accounts in which she held a financial interest or over which she held discretionary authority at 2 other B/D's, and that on at least 6 account applications, she falsely answered “no” to the question of whether she was affiliated with a securities firm.  The RR also failed to provide prior written notice to her employer firm of such accounts.   This conduct violated NASD Rules 2110 (ethical standards) and 3050 (outside activities). The RR also created 2 websites that included misrepresentations about her career accomplishments and employer firm without obtaining approval from a principal of the firm.  This conduct violated NASD Rules 2110 (ethical standards) and 2210 (communications with public).  During 8 months in 2009, the RR also maintained a Twitter account and had more than 1,400 followers - again, not notifying a firm .  For one particular security, the RR posted 32 “tweets”  - which were unbalanced, overly positive and often predicted an imminent price increase.  The RR didn't disclose on the tweets that she and her family held a significant number of shares of the security.  This conduct violated NASD Rules 2210 (communications with public) and IM-2210-1 (misleading communications)), and FINRA Rule 2010 (ethical standards).  RR got a $10K fine and 1-year suspension. For further details, go to:   [FINRA Quarterly Discplinary Review, July 2011]