If you ever wonder whether all the rules and policies really matter, they DO! Let's look at some recent FINRA enforcement cases:
·Business credit card related: An individual was named a respondent in a FINRA complaint alleging he converted $177,962 when he charged personal, non-business expenses to his corporate credit card without his employer’s authorization and had his employer pay for those unauthorized personal expenses by submitting false expense reports that identified those charges as business expenses or failing to notify his employer that the charges were for personal expenses.
·Personal mortgage application related: An individual was named a respondent in a FINRA complaint alleging he misrepresented his debts in a mortgage application and structured withdrawals in his personal bank accounts. The respondent failed to comply with FINRA’s request for information and documents.
·Beneficiary related: An individual was fined $5,000 and suspended for eight months for circumventing his firm’s policies. The rep assisted a customer, to whom he was not related, with designating the rep's immediate family members as beneficiaries on six of the customer’s accounts. The individual did not seek his firm’s approval for the beneficiary designations and had falsely answered firm compliance questionnaires that he was not aware of an immediate family member being a beneficiary on any client accounts.
·Personal Securities Accounts related: An individual was fined $5,000 and suspended for two months for not disclosing to his firm that there were two brokerage accounts maintained at another member firm in his wife’s name. The individually also falsely answered a firm questionnaire that he had disclosed all outside brokerage accounts.
·Social Media/Off-Channel Communications Related: An individual was fined $25,000 and suspended for one month for failing to supervise and properly follow up on off-channel communications conducted by associated persons. The individual used, and knew other firm personnel used, an unapproved social media platform for business-related communications. The individual was also a member of group chats between the firm’s associated persons and firm customers in which the customers’ trading at the firm was discussed. In spite of the knowledge of these messages, the individual failed to stop the communications or ensure the firm captured, retained, and reviewed the messages.
Please contact the Prosperity Network Compliance Team with any questions: compliance@prosperityadvisors.com or 913-529-5500 Option 2.
Internal Use Only
Attachment: August 2025 FINRA Real-World Discipline Examples