BROWSE BY TOPIC
- Investments - Strategies
- Investments - Unsuitable
- Investor Protection
- Regulatory Sanctions
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Wall Street News
- Terminations/Cost Cutting
- Compliance Concepts
- General News
- Donald Trump & Co.
- Big Banks
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
Light Sanctions ($5K, 3 Months) for Untrustworthy Broker with Extended Outside Business Activities
by Howard Haykin
For more than 4 years, this broker failed to notify Wells Fargo Clearing Services (“WFCS”) about the full nature of his participation in 3 outside business activities (“OBAs”) - in particular, his efforts to solicit investments in those activities, which WFCS explicitly prohibited. Two of the broker’s notices to the firm about those OBAs were also untimely. By virtue of this conduct, the broker violated FINRA Rule 3270 (Outside Business Activities of Registered Persons) and consequently FINRA Rule 2010.
IN NOVEMBER 2012 … the broker began engaging in an OBA, a company he helped to found, Agriplas LLC. He notified WFCS about that activity but described his role for Agriplas as merely "[a]dvis[ing] business management on how to best design and sell crop yield enhancement devices utilizing plasma." WFCS allowed the broker to participate in Agriplas, provided that he did not solicit investments in the company.
IN DECEMBER 2013 … the broker founded another company (Atlas Agriculture Systems – OBA #2) that he led as its CEO.
FOUR MONTHS LATER… the broker finally notified WFCS about his role as CEO. WFCS allowed him to participate in Atlas, provided that he didn’t solicit investments in the company.
IN JULY 2016 … the broker founded another company (HydroNOx – OBA #3) that he led as its CEO.
FINANCIALISH TAKE AWAYS. In mid-2017, WFCS discovered the broker’s undisclosed participation in his OBA and terminated its association with him. FINRA then conducted its own investigation, which led to the noted sanctions ($5K fine and 3-month suspension) - which I believe were too lenient. I'm guessing that FINRA inappropriately credited this broker for: (i) having notified the firm that he was engaged or engaging in OBAs; and, (ii) the fact that none of his attempts to raise capital for these companies resulted in any securities transactions.
In any event, because this broker lied and operated in a deceitful manner for more than 4 years - by being less than truthful and by disobeying firm orders - he showed that he cannot be trusted – which, in the financial services business should be grounds for a ‘kiss of death” sentence.