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Regulatory Sanctions

Pattern of Violations, Starting with Broker’s Use of Personal Email

February 12, 2019

by Howard Haykin


A broker with ProEquities Inc. agreed to a $10K fine and a 60-day suspension to settle FINRA charges that he used a personal email account to conduct his securities business, and later obstructed his member firm’s attempts to investigate and monitor his email correspondence with firm customers.



WHAT WENT WRONG.    Between 2013 and 2016 (the "Relevant Period"), the broker sometimes used his personal email account to conduct his securities business, including communications with customers and prospective customers. For example, in or about September 2016, he emailed a prospective customer a blank account form with instructions to fill it out and return.


In December 2016, ProEquities discovered that the broker had been using his personal email account to conduct some of his securities business and it requested that he provide his personal email account password, so that the Firm could review the nature and extent of the securities business the broker had conducted through personal email.


At first, the broker provided his password to the Firm. But then he began deleting emails from his personal account, and later changed his password in an attempt to prevent the Firm from further accessing his emails. Shortly thereafter, the Firm terminated its association with the broker.


By virtue of the foregoing, the broker caused the firm to violate FINRA’s Books and Records Rule 4511(a). A violation of FINRA Rule 4511 is also a violation of FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade.



FINANCIALISH TAKE AWAY.    Frankly, I’m surprised the broker received only a 60-day suspension. While I appreciate the fact that he’s got 17 years‘ experience, holds a Series 24 (General Securities Principal) license, and had a clean disciplinary record, I still expected more from FINRA. Here’s why:


  • FINRA typically comes down hard on individuals who lie on firm ACQs (annual compliance questionnaires), as this broker did.
  • Here's what he lied about...
  • From 2013 to 2016, the broker violated firm policy by using his Yahoo! personal email account to correspond with current and prospective firm customers. And after being caught, he obstructed ProEquities’ attempts to investigate and monitor his personal email activities.
  • From 2014 to 2016, the broker violated firm policy by sharing over $200,000 in commissions with 2 other brokers in his office.
  • For an undisclosed period, the broker shared office space with an individual not affiliated with ProEquities.


It all adds up to a recent pattern of violations and dishonesty, which prompts me to ask ‘who would want to hire this individual?’



This case was reported in FINRA Disciplinary Actions for January 2019.

For further details, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017052960801 .