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Regulatory Sanctions

A Tough Luck Broker Got Caught Accepting Large Monetary Gifts

October 18, 2018

by Howard Haykin


Gifts over $100 from customers? No doubt a common occurrence, though we rarely come across a FINRA case where a registered individual is sanctioned for accepting out-sized gifts in violation of firm and industry guidelines (like the case below). Of course, firms stay out of harm's way – by requiring their associated persons to certify annually that, among other things, they complied in full with all applicable rules and regs. An effective ‘CYA’ practice.


A broker (14 years with Raymond James Financial Services) agreed to pay a $10K fine and serve a 4-month suspension to settle FINRA charges that he accepted a total of $58,000 in monetary gifts from a customer of his member firm.


FINRA FINDINGS.    From 2010 through 2016, RJFS had in place a policy prohibiting registered reps from accepting monetary payments and/or gifts in excess of $100 per year from firm customers. This broker, of course, certified to his understanding of these firm policies on 6 annual compliance questionnaires (“ACQs”) during that period.


However, over those 6 or 7 years, this broker accepted monetary gifts in excess of $100 per year from a customer of the firm. Specifically, he accepted monetary gifts totaling $58,000 from the customer. While we don’t know how FINRA or RJFS discovered the gifts, but we do know that the firm discharged the broker in April 2017 for “accepting cash gifts from customer and failing to disclose the Firm existence of ongoing gifts.”  


FINANCIALISH TAKE AWAY   This is a simple and relatively straight-forward case study that, while lacking any moral values, offers a valuable lesson or warning: If you (an associated person) violate the rules and then lie about it in a certification to your firm, you’re going to pay a steep price - and maybe even terminate a successful career.


This case was reported in FINRA Disciplinary Actions for October 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017054089101.