by Howard Haykin

William Baum agreed to pay a $5K fine and serve a 30-day suspension to settle FINRA charges that he communicated with customers using text messages, which were not accessible for oversight by the firm.

BACKGROUND.    Baum, a Stilwell, KS, resident, has 31 years’ experience with 6 firms. He’s been associated with Great American Investors from 2001 to present. Baum holds the following registrations: (i) a Series 7 General Securities Rep; (ii) a Series 7 Investment Banking Rep; (iii) a Series 24 Operations Professional; and, (iv) a Series Options Principal. He had no prior relevant disciplinary history.

FINRA FINDINGS.    In 2015, Baum sent 58 text messages to 16 customers relating to his securities business, regarding:

• investment strategies – such as how a customer should react to a market decline, or whether a customer should adjust his or her portfolio before an impending political decision.
• specific securities – such as telling a customer that a certain stock's price was about to increase, or explaining to a customer why a company had extended a tender offer.
• Administrative aspects – such as addressing a customer's request for a check.

In addition, Baum sent text messages to securities customers prior to 2015 using a telephone that he no longer owns. Neither Baum nor the firm retained copies of those communications

By doing so. Baum prevented his firm from supervising those communications, he violated firm policy about business correspondence., and he contradicted his attestations made before and during 2015 that he would use his firm’s email system “for all business correspondence" and would "retain all correspondence” with customers for his firm's review.

This case was reported in FINRA Disciplinary Actions for September 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2015048070901.