Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Regulatory Sanctions

80 Years of Experience, Yet No Leniency from FINRA in Meting Out Sanctions

January 22, 2019

by Howard Haykin


The two brokers, with 80 years of combined experience and basically clean disciplinary records, were caught exercising discretion in customer accounts without first obtaining their customers' written approvals and their member firms' acceptance. Notwithstanding their lengthy and 'spotless' careers, FINRA opted to fine both $5K and suspend them for 15 or 20 days - consistent with past FINRA sanctions for similar violative conduct [see Financialish, 10/18/18]


By their respective actions, each broker violated NASD Conduct Rule 2510(b), Discretionary Accounts, and FINRA Rule 2010.



FINRA AWC #2015043584402 – Fined $5K, Suspended 15 Days.    From June 2014 through June 2015, a Berthel Fisher broker, with 42 years’ experience, effected hundreds of transactions in 2 customers' brokerage accounts without first obtaining written approval from the customers to do so. And even though each customer had verbally authorized the broker to exercise discretion in their accounts, Berthel Fisher prohibited the use of discretion in brokerage accounts – which is why the broker never sought out the firm's acceptance of the accounts as discretionary.


In addition to FINRA’s sanctions, the broker was U5’d in September 2018 by Berthel Fisher for “failure to respond to an inquiry from the Compliance Department.”



FINRA AWC #2017055321601 – Fined $5K, Suspended 20 Days.    In August 2017, FINRA's Senior Helpline received a call from an individual who alleged that a Morgan Stanley broker, with 38 years’ experience, had placed trades in an account belonging to his mother without first speaking to his mother.  Investigations by FINRA and Morgan Stanley revealed that the broker had, in fact, exercised discretion without written authorization in the accounts of 7 customers from August 2016 through July 2017. And, although the 7 customers had given the broker express or implied authority to exercise discretion in their accounts, none had provided written authorization for him to exercise discretion.


The broker also submitted committed a 'FINRA cardinal sin' by submitting an annual compliance questionnaire (ACQ) in which he falsely indicated that he had not exercised discretion in any customer account. This ACQ response probably 'earned' the broker the extra 5 days of suspension.



These cases were reported in FINRA Disciplinary Actions for January 2019.

For details on either case, go to ...  FINRA Disciplinary Actions Online, and refer to the Respective Case Number.