If you ever wonder whether all the rules and policies really matter, they DO! Let's look at some recent FINRA enforcement cases:
- Improperly shared photos of confidential data: An individual was fined $5,000 and suspended for one month for improperly sharing photos of confidential data taken on his personal cell phone with individuals not affiliated with his member firm. He sent text messages to friends that showed client names, account balances, account numbers, dates of birth, employer and other background information.
- Private Securities Transaction (no commissions received): An individual was fined $7,500 and suspended for four months for assisting clients with investing in private security transactions. The individual did not receive any commission or payment for assisting the clients. He introduced the customers to the investment opportunity, provided information regarding the company to the customers, and assisted two customers with liquidating investments in their brokerage accounts to generate the funds for the investment.
- Borrowing from customers: An individual was fined $5,000 and suspended for three months for borrowing a total of $173,000 from two of his customers, who were senior investors. The individual used the borrowed funds to make a payment in connection with a personal investment. The individual was personally friends with the customers, but they were not immediate family. The loans were undocumented and did not include any interest payments. The loans were repaid in full.
- Low Priced Securities: An individual was fined $25,000 and suspended for 24 months for recommending retired and senior investors purchase speculative and low-priced securities that were not in their best interest. Each customer had a low risk tolerance and investment objectives of preserving capital and generating income. The recommendations caused over $1.8 million in losses.
- Confidential and Proprietary information taken prior to Rep leaving the firm: An individual was fined $10,000 and suspended for four months. In anticipation of leaving his member firm for a new firm, he improperly took confidential and proprietary information from his firm’s systems, including nonpublic information about the firm’s customers. He sent unencrypted emails to his personal email address that contained, among other things, contact lists, screen shots of firm emails and firm websites, presentations made to customers, and materials created by other firm employees.
Please contact the Prosperity Network Compliance Team with any questions: compliance@prosperityadvisors.com or 913-529-5500 Option 2.