Fines and Suspensions For Brokers In Sales Quota Sham
June 8, 2015
They say that there is a difference between doing the right thing and having the right to do something. Then there's the further issue of whether the thing you've done is right and who gets to make that call. In today's BrokeAndBroker.com Blog, we have two, count 'em: two!, FINRA regulatory settlements involving three annuities transactions and the seemingly generous offer of one registered representative to "give up" the transactions to an apparently struggling colleague. Of course, there are two more sayings that seem to come into play here:
- No good deed goes unpunished; and
- The road to Hell is paved with good intentions
Case In Point
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Terry W. Burcin submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Terry W. Burcin, Respondent (AWC #2011026121801, June 2, 2015).
Burcin was first registered in 2007 with FINRA member firm MML Investors Services, LLC The AWC asserts that he had no prior disciplinary history with the Securities and Exchange Commission, any self-regulatory organization, or any state securities regulator.
Burcin and "GL"
The AWC asserts that in February and March 2010, Burcin placed his name as the soliciting registered representative on three customers' variable annuity applications, even though he never met with the customers and was not involved in the sales of the annuities. The registered representative who had actually solicited the sales is identified in the Burcin AWC as "GL." Both Burcin and GL were licensed to sell the subject annuities.
Reimbursement
After receiving $8,800 in compensation for the annuities transaction, the AWC asserts that Burcin reimbursed GL via personal checks.
FINRA Sanctions
FINRA deemed that Burcin's conduct caused MML Investors's books and records to be inaccurate, in violation of NASD Conduct Rule 3110 and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Burcin a $5,000 fine and a 10-business-days suspension from associating with any FINRA member firm in any capacity.
Unmasking the Mysteries of the FINRA Directorate of Intelligence
My oh my . . . who could the elusive GL possibly be?
GL's name is not disclosed in the Burcin AWC. If you read the AWC, you will not even find a cross-reference to any other AWC or FINRA disciplinary matter involving GL. Perhaps national security interests dictate such a cover-up? Maybe there are hidden powers at FINRA who have dictated that GL's name be withheld from public dissemination because of some risk of upsetting the structural integrity of the Universe?
Alas, inveterate regulatory sleuth Bill Singer uncovered the key to the FINRA "GL" code. Although no identification of GL was provided in FINRA AWC 2011026121801 (the Burcin AWC), Singer unearthed FINRA AWC 2011026121802, and the veil of secrecy and the cone of silence were lifted.
A Second Case In Point
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Geoffrey R. Lester submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Geoffrey R. Lester, Respondent (AWC #2011026121802, June 2, 2015).
Lester was first registered in 2001 with FINRA member firm MML
Investors Services, LLC The AWC asserts that he had no prior disciplinary
history with the Securities and Exchange Commission, any self-regulatory organization,
or any state securities regulator.
TB Or Not TB
The AWC asserts that in order to help a registered
representative -- hidden behind the puzzling identification in the
Lester
AWC of only two letters: "TB" -- meet his monthly
sales quota in February and March 2010, Lester instructed TB to place the
latter's name as the broker of record on three customers' variable annuity
applications, even though TB did not substantially participate in the
sales.
The Reimbursement
The AWC further alleges that TB reimbursed Lester for the
latter's lost commissions via a personal check in the amount of $8,200. Although this type of reimbursement
transaction often involves a scenario when one registered person is licensed to
sell a product (or in a state) and the other rep is not, in this matter, the
AWC asserts that both were licensed to sell the subject annuities.
FINRA Sanctions
FINRA deemed Lester's conduct caused MML's books and records to be inaccurate, in violation of NASD Conduct Rule 3110 and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Lester a $5,000 fine and a 10-business-day suspension from associating with any FINRA member firm in any capacity.
Snarky BS Side Bar: Although the hidden identity in the Brancin AWC of "GL" easily fell to the unceasing onslaught of detective Singer, TB's identity has proven immune to Singer's best efforts. He senses that TB's identity is likely right under his nose, perhaps Singer is even holding the clue in his lawyerly hands, however, the solution is just not coming to the forefront.
If anyone has any idea as to TB's identity or is aware of any further clues in the Lester AWC that could break this case wide open, please contact Bill Singer immediately. All communications will be held in strictest confidence. Please only refer to Bill Singer as "BS" is any communications.
Bill Singer's Comment
At first blush, these two AWCs' -- companions cases, I would call them -- seem a bit silly. Initially, you're struck by what seems a very generous offer by Burcin to help "GL" meet a sales quota. I mean, you know, there doesn't seem to be a lot of altruism on Wall Street. Moreover, as you read through the deal cut by the two registered reps, you take note of the fact that both were registered to sell the annuities, so there doesn't seem to have been an issue of an unlicensed rep getting credit for selling a product that he should not have sold. Similarly, no funds were improperly diverted from the subject customers to pay the selling compensation.
Then, as you mull over the details, you realize that Lester reimbursed TB for the $8,000 in comp. So much for altruism.
TB made a nice gesture; however, it didn't come at a cost to TB or even Lester but, in a sense, it did come at a cost to MML Investor Services because that firm may have paid Lester a higher percentage pursuant to the compensation grid because he met his quota (which apparently would not have happened but for the deal between the two Respondents). If, in fact, Lester's meeting of his quota did not result in a higher pay-out, then, at best, the fabricated transactions may have prevented or deferred a decision by MML to retain his employment based upon the false appearance of a satisfied quota. Whether the payment or employment scenario was impacted by the cited annuities' transactions, the deal interfered with MML's right to know who truly generated what.
Finally, I still fail to understand FINRA's ongoing idiocy in protecting the identities of individuals who are referenced in an AWC in which their names do not appear in the caption but they are ALSO named as respondents in separate actions and they ALSO settled those separate actions or were adjudicated guilty. And puuhleaaase note the term "ALSO" because I do understand the appropriateness of using initials to mask the identities of individuals who have not yet settled or are actively contesting their alleged guilt. See these articles for further examples of this misguided policy:
- The Stockbroker,The Compliance Officer,The Dead Customer And The Accommodation Forgery (BrokeAndBroker.com Blog, May 13, 2015)
- Drilling Partnership Gives Supervisor And Stockbroker FINRA Gas (BrokeAndBroker.com Blog, June 16, 2014)
- BS Breaks FINRA KH AWC Code (BrokeAndBroker.com Blog Blog, June 4, 2014)
- FINRA Says TS In Training Impersonation (BrokeAndBroker.com Blog, October 10, 2013)