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Regulatory Sanctions

And Did You Hear About the Principal Who Submitted Misleading Documents to FINRA?

September 7, 2018

By Howard Haykin


A General Securities (Series 24) Principal - who had 28 years’ experience with 5 firms and sported a spotless disciplinary record (with not even a customer complaint) - agreed to pay a $5K fine and serve a 9-month suspension to settle FINRA charges that, during a FINRA examination of his member firm, he submitted misleading documents and written responses to questions submitted to his firm by FINRA.


FINRA FINDINGS.    In March 2014, a statutorily disqualified person (”DQRR”) began providing services to GC Andersen Partners in connection with various firm private placements. DQRR thus became associated with the Firm.


In August and September 2016, FINRA conducted an examination of GC Andersen, FINRA examiners submitted a series of requests seeking information about DQRR’s work on the firm’s private placements, including: (i) the work DQRR performed; (ii) the manner in which DQRR was compensated; and, (iii) "timesheets and billing invoices DQRR has submitted to the firm for his services."


In response to FINRA’s requests and questions, the General Securities Principal provided documents and written responses that contained misleading information, which concealed the full scope of the activities performed for GC Andersen by a statutorily disqualified person.


  • Two responses contained inaccurate statements concerning DQRR’s work on Firm private placements and the manner in which JM was compensated.
  • They failed to describe fully DQRR's work on certain private placements and omitted tasks he performed such as preparing transaction documents and marketing materials.
  • Though the General Securities Principal was aware that these written responses may have been inaccurate or incomplete, he did not inquire about DQRR with other persons at the Firm or take any other steps to ensure that the Firm's responses were accurate.


  • In response to FINRA’s request for DQRR’s billing records, the General Securities Principal instructed DQRR, himself, to prepare documents reflecting hours that DQRR purportedly had billed to the firm.
  • DQRR then prepared and backdated the documents to make it appear as if DQRR had billed his time contemporaneously with the work he performed.
  • The General Securities Principal submitted the timesheets to FINRA without disclosing that they had been backdated.


  • During his on-the-record testimony, the General Securities Principal admitted that the documents he submitted to FINRA were not contemporaneous time records.


The actions taken by the General Securities Principal were violations of FINRA Rule 2010.


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

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2016047624602.