BROWSE BY TOPIC
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Investments - Private
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Regulatory Sanctions
- Wall Street News
- Rules & Regulations
- 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
Veteran Louisiana Broker Caught Violating Terms of His Outside Business Activities
by Howard Haykin
A broker with Signator Investors agreed to pay a $5K fine and serve a 3-month suspension to settle FINRA charges that, within the scope of outside business activities, he sold unapproved fixed indexed annuities. While the broker had received the firm’s approval to engage in insurance brokerage as an outside business activity (“OBA”), he was prohibited from selling fixed indexed annuities unless they were sold through and approved by the firm.
Between June 2016 and May 2017, while working as an independent agent for a 3rd-party insurance company, the broker sold more than $1.6 million in ‘unapproved’ fixed indexed annuities to 5 purchasers - 2 of whom were Signator customers. The broker earned more than $114,000 in commissions for these insurance transactions.
By virtue of his violative conduct, the broker was deemed to have violated FINRA Rule 3270 (Outside Business Activities of Registered Persons).
FINRA Rule 3270 (Outside Business Activities of Registered Persons) prohibits registered reps from engaging in OBAs in which they receive compensation or have the reasonable expectation of compensation without providing written notice to their member firm. FINRA Rule 2010 requires that members and associated persons observe high standards of commercial honor and just and equitable principles of trade. Conduct that violates FINRA Rule 3270 also violates FINRA Rule 2010.
FINANCIALISH TAKE AWAYS. A 3-month suspension is significant, especially for a broker who had a clean disciplinary record throughout his 22-year association with Signator Investors. On the plus side, however, the broker was fined only $5,000 – while earning over $114,000 in commissions on the violative transactions. Why the low fine?
Perhaps FINRA took into account these 4 basic factors:
- the broker had a clean disciplinary record over his lengthy career;
- the customers were pleased with the insurance contracts they purchased and with the service they received from this broker;
- the broker might not have remembered the 'fixed annuities' prohibition from 14 years earlier when the firm initially permitted him to engage in selling insurance as an OBA; and,
- FINRA needed to issue some sort of fine, so it handed out its 'standard minimal amount'.
Postscript. I'm pleased to report that the broker is currently associated with another broker-dealer - after voluntarily resigning from Signator Investors in August 2017 during the ongoing internal investigation into his violative conduct.
This case was reported in FINRA Disciplinary Actions for December 2018.
For details the case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2017053139401.