FINRA Fines And Suspends Rep For Service as Director

Sometimes it's simply a misunderstanding: You didn't think that you had to disclose to your employer brokerage firm that you were serving as a director or officer of a company. Sometimes it's not a misunderstanding and, for whatever reason, you opted to hide your outside activity from your employer. Then again, sometimes you get caught and sometimes you don't. Frankly, I really don't give a damn if you get away with it because as a lawyer, I can't charge you an exorbitant retainer and astronomical hourly fees if you managed to avoid detection. As to those of you who got nailed by your employer and/or FINRA, how much justice can you afford?

9/2010 -3/2015 Arque Capital, Ltd. ("Arque")

7/2010 - 9/2010 Newbridge Securities Corporation ("Newbridge")

9/2009 - 6/2010 Purshe Kaplan Sterling Investments ("PKSI")

4/1995 -  6/2009 Morgan Stanley Smith Barney and predecessors

Side Bar:  Many registered persons are engaged in other professions and careers; and in most cases, you are required to provide prior, written notice to your employer of such OBA. Although FINRA's OBA Rule doesn't require that the employer firm transmit an "approval' or "denial" to you of such disclosed OBA, the fact is that many member firms have in-house rules that prohibit such outside activities absent written approval or an approval imposing certain limits. Consequently, if you transmit notice of any OBA, make sure that you retain proof of the date and manner in which you transmitted that notice. Consider the full-text of FINRA's applicable rule:

FINRA Conduct Rule 3270. Outside Business Activities of Registered Persons

No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member. Passive investments and activities subject to the requirements of NASD Rule 3040 shall be exempted from this requirement.

*** Supplementary Material ***

.01 Obligations of Member Receiving Notice. Upon receipt of a written notice under Rule 3270, a member shall consider whether the proposed activity will: (1) interfere with or otherwise compromise the registered person's responsibilities to the member and/or the member's customers or (2) be viewed by customers or the public as part of the member's business based upon, among other factors, the nature of the proposed activity and the manner in which it will be offered. Based on the member's review of such factors, the member must evaluate the advisability of imposing specific conditions or limitations on a registered person's outside business activity, including where circumstances warrant, prohibiting the activity. A member also must evaluate the proposed activity to determine whether the activity properly is characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirements of NASD Rule 3040. A member must keep a record of its compliance with these obligations with respect to each written notice received and must preserve this record for the period of time and accessibility specified in SEA Rule 17a-4(e)(1).

the discharge of Nahass' registration for violating the Firm's written supervisory procedures and compliance polices because he failed to notify Arque that: (i) he engaged in outside business activity as a director of a publicly traded company since approximately January 2012; and (ii) he opened an outside securities account in March 2014 and he liquidated shares of the company for which he acted as a director,

• Director
• OBA
• Outside Business Activities
• President
• Secretary
• Treasurer
• Rule 3270
• Away Accounts
• Annual Compliance Questionnaire
• FINRA
• AWC
• BrokeAndBroker
• Bill Singer