by Howard Haykin

CASE 1 [$10K fine and 5-month suspension].  In April and December 2009, a broker with Robert W. Baird accepted 2 loans from a firm customer totaling $70,000. The loans were never disclosed and the broker never repaid them.

The lengthy suspension was in large part based on these other factors: (i) he attested on multiple ACQs that he had not borrowed money for a current or former client; and, (ii) he used a personal email account to correspond with the customer and her son regarding various account matters and the outstanding loans.  [FINRA Case #2017054796901]

CASE 2 [$5K fine and 18-month suspension].  Between August 2014 and October 2016, a broker with J.W. Cole, borrowed a total of $118,500 from 5 firm customers – the bulk from an elderly couple. The need for the loans were due, in part, to the broker’s deteriorating financial circumstances caused in part by gambling. The broker continued to gamble after receiving the loan proceeds. Of the $118,500 borrowed, $102,786 remains outstanding. The loans were never disclosed until September 2016, when the broker self-reported the loans – resulting in his termination.

The lengthy suspension was no doubt based on these factors:  (i) he “took advantage” of elderly customers – at least 3 of the 5 lending customers were elderly; and, (ii) he had an apparent gambling addiction that presents an outsized risk to customers' funds and investments.  [FINRA Case #2016051931501]

CASE 3 [$5K fine and 3-month suspension].  In March 2016 a broker with PFS Investments borrowed $3,000 from her customer, with repayment due within 3 weeks. The broker’s initial attempt to repay the loan failed when her check was returned for insufficient funds. Over the next 13 months, the broker failed to repay any portion of the borrowed funds. The customer complained to the firm in June 2017 – at which point the Firm repaid the loan.

The lengthy suspension was no doubt based on these factors: (i) she falsely certified on the Firm's ACQ that she had not borrowed money from any firm customer; and; (ii) she was unable to repay the relatively small loan over an extended period.  [FINRA Case #2017055404901]

CASE 4 [barred from industry].  Between 2009 and 2013, a broker with several firms, including Oppenheimer & Co., borrowed $1.35 million from an elderly married couple. The loans were never disclosed to his firms. In addition, the broker executed a $1.4 million promissory note for the loans and quickly breached the agreement by making none of the required monthly payments. The elderly couple filed a Statement of Claim against the broker and his various associated firms.

Days before a scheduled arbitration, the elderly couple, through their successor in interest, settled their claim against the broker – though he soon thereafter breached his obligations under the settlement. Broker was suspended for failure to comply with the settlement.

The broker was ultimately barred by an OHO hearing officer, no doubt based on these factors: (i) he took advantage of elderly customers; (ii) he repeatedly failed to make required payments; and, (iii) he provided false on-the-record testimony during a previous FINRA investigation into his borrowing activity.    [FINRA Case #2016050205901]

For details on any case, go to ...  FINRA Disciplinary Actions Online, and refer to the respective Case Number.