If you ever wonder whether all the rules and policies really matter, they DO! Let’s look at some recent FINRA enforcement cases:
- Exercising control on mother’s account without disclosing to his firm: A financial professional was fined $25,000 and suspended for two years for exercising discretionary authority in mother’s account, held outside of his firm, without disclosing the existence of the account to his firm or disclosing his status as an associated person of this firm to the executing firm. The financial professional also did not disclose his mother’s account on two firm annual compliance questionnaires, despite exercising control over his mother’s account.
- Failure to submit OBA in a timely manner: A financial professional was fined $5,000 and suspended for three months for failing to accurately disclose the nature and scope of a referral arrangement. He specifically misstated the activity’s start date and understated the compensation amount. The rep failed to update his OBA disclosure and falsely attested in an annual compliance questionnaire that he had fully and accurately disclosed all OBAs to his firm.
- Reverse mortgage recommendations without disclosing them as an OBA: A financial professional was fined $10,000 and suspended for four months for engaging in an undisclosed outside business activity with a reasonable expectation of compensation. The rep recommended reverse mortgages to four customers, advised one customer regarding specific loan terms to seek, and helped all the customers prepare their loan applications. These activities were not disclosed to the firm.
Please contact the Prosperity Network Compliance Team with any questions.
compliance@prosperityadvisors.comor 913-529-5500 Option 2.
Internal Use Only
Attachment: FINRA Monthly Disciplinary Actions August 2026