A Registered Principal who was served as President and Chief Compliance Officer for a New Jersey broker-dealer, was charged with misconduct for, among other things, not maintaining and implementing adequate supervisory procedures.  In its case summary, FINRA focused on the fact that the firm, through this individual, had not addressed deficiencies noted in a Letter of Caution by the time FINRA staffers began the next on-site examination. The Respondent.   Patrick Thomas Walker entered the securities industry in 1991, and from 2003 until October 2007, he served as President and CCO of Parker Financial Corporation.  He was removed from these positions in October 2007, though he remained with the Firm as a branch manager and an RR for another year. FINRA's 2006 and 2008 Examinations. FINRA Member Regulation conducted a 2008 examination that disclosed deficiencies in the Firm's WSPs and its failure to establish supervisory control procedures, including procedures regarding SEC Regulation S-P.  As it turned out, Member Regulation had issued an LOC to Parker Financial related to a 2006 examination, that included the identical deficiencies in WSPs and control procedures. Walker knew of the LOC and its contents at the time it was issued, but failed to address the deficiencies identified in the 2006 LOC following that FINRA exam.  Among other things, the firm's WSPs were found to be deficient as to:

(i) maintenance of Firm's Form BD;  (ii) prohibition of commission payments to non-registered entities;  (iii) designation of an appropriately licensed principal for each of the firm’s product lines;  (iv) maintenance of WSPs at each OSJ;  (v) investigation into the qualifications of new hires;  (vi) obligations of Firm when handling accounts of associated persons employed at other FINRA-regulated broker-dealers;  (vii) timely providing account records to customers;  (viii) prompt notification to regulators of deficiencies in required net capital;  and, (ix) prohibition of the sale of unregistered securities beyond the private offering’s expiration dates.  FINRA in 2006 also indicated that the firm’s WSPs were deficient with respect to Regulation S-P.

Surprisingly, Parker Financial was issued only an LOC, which Walker should have taken as a "God-send" and then promptly corrected each and every deficiency, followed by written notice to FINRA that all had been corrected.  Unfortunately, Walker must have been in "LA-LA Land" because he dropped the ball. And so, President Patrick Thomas Walker committed a CARDINAL SIN when time came for the next FINRA examination - a full 2 years later, not just the following year - and the examiners discovered all the same deficiencies.  [C-I Note: What wonderful low-hanging fruit for the examiners.] All told, FINRA examiners found that Walker had not only failed to update and amend the WSPs to correct past deficiencies, he also failed to establish, maintain and enforce WSPs and supervisory control procedures in the cited areas to ensure compliance with applicable securities laws and regulations, including Regulation S-P. FINRA Sanctions. Incredibly, Walker was only fined $5,000 and suspended 10 days from serving in a supervisory or principal capacity.  [Go figure.]   For further details, go to:   [FINRA AWC #2008011724302].   [Disciplinary Actions for October 2011]