July 2025 FINRA Real-World Discipline Examples
If you ever wonder whether all the rules and policies really matter, they DO! Let's look at some recent FINRA enforcement cases:
- U4 not updated: An individual was fined $7,500 and suspended for 3 months for not amending his Form U4 within 30 days regarding two felony charges. The individual was charged with two felony counts of assault by automobile and was required to report this on his U4. In addition, the individual had answered falsely on the firm’s annual compliance certification that he had not previously been arrested, arraigned, indicted or convicted of, or pled guilty to, or pled no contest to, any criminal offense (other than a minor traffic violation).
- IAR was beneficiary of client’s estate: An individual was fined $10,000 and suspended for seven months for accepting a bequest of more than $1 million from the estate of a customer without written approval from his Firm.
- Annuity related: An individual was fined $5,000 and suspended for four months for recommending a senior-adult couple purchase a $100,000 variable annuity contract. This resulted in more than half of the customers’ net worth being invested in variable annuities. The individual also inaccurately completed variable annuity applications with incorrect investment time horizons.
- OBA related: An individual was fined $10,000 and suspended for six months for engaging in an OBA without fully disclosing the activity to the Firm. The individual formed an LLC to identify potential real estate investment. However, the LLC was also used to provide consulting services to a TPA that provided administrative services to retirement plans. He was paid approximately $600,000 through the LLC. Although the individual disclosed he owned the LLC, he falsely stated the activity was limited to real estate and that he received only $1,500 annually from the LLC.
Please contact the Prosperity Network Compliance Team with any questions: compliance@prosperityadvisors.com or 913-529-5500 Option 2.
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Attachment: July 2025 FINRA Real-World Discipline Examples