Bill Singer's Comment

Online FINRA BrokerCheck records as of March 8, 2018, disclose that Murphy has "22 Years of Experience" with "31 Firms."

As is often the case when a firm parts ways with its CCO (either via the firm's discharge of her or her resignation), we are confronted with an oddball paradox: Can/Should the CCO file her own U5? 

A Friendly Parting

When the parting of ways is amicable, the CCO frequently authors her own U5 and files it via CRD. Until such time as a CCO hits "SEND" on the submission of her U5 to CRD, she often retains her authority as the CCO and is still acting within her capacity to terminate her own registration and submit whatever explanations she deems accurate. 

An Unfriendly Parting

In making the point in the above paragraph, note that I used the word "often" in contradistinction to "always." Clearly, there are times when a member firm fires its CCO, the circumstances are not amicable, and the firm would insist that once it told its CCO that she was fired that she immediately lost her authority to function in that capacity and should not file her own U5. 

The Last Act?

It is not clear from the AWC's fact pattern as to whether Murphy and Noble parted on friendly, unfriendly, or neutral terms. It is clear, however, that she did not have authorization to log onto Noble's CRD gateway and amend her U5. Of course, that raises an interesting question as to just how a firm with one and only one CCO can submit a U5 for anyone if the CCO has resigned or been fired but no replacement has yet been designated. Some might argue that the last act that a CCO is required to engage in would be the filing of her own U5 in order to officially terminate her registration in that capacity. Pointedly, I'm not taking a position on that last question as it is nuanced and very, very fact dependent but it does raise an interesting question as to who can and should file a CCO's U5.

2 Wrongs Don't Make 1 Right

Let's just agree that on August 23rd, someone at Noble filed Murphy's Form U5.  Upon reviewing the August 23rd U5, Murphy asked Noble to amend some disputed language, which appears to include her unhappiness with the disclosed basis for her termination as "Permitted to Resign." For reasons not explained in the AWC, Noble refused Murphy's request. Thereafter, on August 24th, Murphy allegedly logged onto the firm's CRD account using her former access identification and amended the U5 to show that her termination was "Voluntary." I concede without equivocation that Murphy's unauthorized access and her use of her access identifier were improper acts in violation of both regulatory rules and compliance policies. So . . . we all at least clear that I am NOT defending Murphy's conduct? Two wrongs don't make one right.

Not False

In digesting Noble's disclosure of Murphy's termination as "Permitted to Resign" and her self-help amendment to "Voluntary," I have taken note of -- and placed great emphasis on -- the AWC's assertion that: "Although the new termination explanation entered by Murphy was not false, Noble Capital had not approved it or otherwise authorized Murphy to access the Firm's CRD account."

Okay, let's slow down that regulatory roll. As a CCO, Murphy would seem to be under an obligation to ensure that any filed U5 is "accurate." Similarly, as a FINRA member firm, Noble would be under the same "accurate" proscription. Of course, FINRA has this penchant for obfuscation, which explains why the self-regulatory-organization characterizes Murphy's amended language as "not false." Not false? As in what? Not untrue? Not not a lie? I mean for godsakes we're reading a settlement of regulatory allegations and FINRA doesn't think it's time to fish or cut bait and either conclude that Murphy's amendments were "true" or "false"?  If, in fact, Murphy's amendments constituted lies and falsehoods, that would strike me as exacerbating factors. If her amendments were accurate and entered to ensure that disclosures filed with an industry regulatory were truthful, then that raises an interesting dilemma. 

No Harm But Foul?

On January 11th, Noble amended Murphy's U5 by amending the Reason for Termination from the firm's initial filing of "Permitted to Resign" and Murphy's amended "Voluntary Resignation" to "Other." Also, Noble amended the Termination Explanation to "Firm no longer able to accommodate employee's request to work from remote location."  In the end, it sort of seems like Noble acknowledged that its first iteration of Murphy's U5 was something between "not false" and "not true," and, as such, maybe clarification was necessary. 

I would view the whole U5 scenario as much ado about nothing unless Noble complained to FINRA about Murphy's unauthorized access. If the firm did complain, then, okay, I won't argue the point and will respond to this AWC with a shrug. If the firm did not complain to FINRA, then the underlying events come off as the type of crap that often occurs when an employee is transitioning to a former employee and there are a few punchlist items that need to be addressed along the continuum.