BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
- Regulatory Sanctions
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
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.
NEWSLETTERS & ALERTS
FINRA Caught Broker in a State of ‘Suspended Animation’
[Photo: Suspended Animation (Blueberry … Intro), by Jett Badass Michaels / YouTube]
by Howard Haykin
An individual associated with Potomac Capital Markets agreed to pay a $10K fine and serve a 14-month suspension, settling FINRA charges that he acted in the capacity of a registered rep while suspended by FINRA in all capacities.
FINRA FINDINGS. FINRA suspended the individual on July 10, 2013, after he apparently failed to comply with an arbitration panel's award or settlement agreement that required him to repay a former employer for an unvested broker signing bonus. The individual left his former employer with one year remaining on the bonus vesting schedule.
Unfortunately, while serving that suspension (which FINRA lifted 4 months later) the suspended broker continued to act in the capacity of a registered rep at Potomac. On multiple occasions, he acted on behalf of his private fund clients - e.g., private equity funds and hedge funds – by soliciting prospective investors to purchase limited partnership interests in these funds. As a result of violating his original suspension, the individual was hit with a $10K fine and 14-month suspension.
FINANCIALISH TAKE AWAY. Upfront signing bonuses or forgivable notes that broker-dealers pay to new registered reps are a 2-edged sword. The money is generous and the forgiveness divine. But if the broker fails to fulfill his obligation – namely, serving out the term of his or her vesting period, or failing to meet sales targets – then the broker usually has little recourse but to repay the bonus (which he or she has undoubtedly already spent).
Clawbacks of unvested signing bonuses are a harsh reality, and arbitrators invariably will decide in favor of the employer. And that appears to be what happened in this case.
This case was reported in FINRA Disciplinary Actions for August 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2014043691301.