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FINRA Fines and Suspends Stockbroker Over Executor Role
January 27, 2016
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, Robert Richards
Jr. submitted a Letter of Acceptance, Waiver and Consent ("AWC"),
which FINRA accepted. In the Matter of Robert Richards Jr.,
Respondent (AWC 2015043964901, January 15,
2016).
Richards first became registered in 1993 and from October 2007 - February 2013, he was registered with National Planning Corporation ("NPC"). Not cited in the AWC but set forth in FINRA's online BrokerCheck records as of January 27, 2016, Richards was registered with FINRA member firm Securities America, Inc. from March 2013 - August 17, 2015. The AWC asserts that Richards had no prior relevant formal disciplinary history with the Securities and Exchange Commission, any self-regulatory organization or any state securities regulator.
Outside Business
Activities
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:
The AWC asserts that from November 2007 - December 2011, without providing prior written notice to his employer firm NPC, Richards was appointed and served as co-executor of a customer's estate, for which he received approximately $10,000 in compensation. During this time, NPC required its registered representatives to provide prior written notice of all outside business activities. Further, NPC's policies prohibited its registered representatives from acting for a customer's estate as an executor.
FINRA Conduct Rule 3270. Outside Business Activities of Registered PersonsNo 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).
No Prior Written Notice
The AWC asserts that in August 2010, Richards
allegedly falsely represented on an NPC Compliance
Questionnaire that he had previously
disclosed to the firm all outside business activities and that he had not acted
as an executor of an
estate.
NPC Discharge
NPC Discharge
Not set forth in the AWC,
FINRA's online BrokerCheck records disclose as of January
27, 2016, that NPC "Discharged" Richards on February 26, 2013, based
upon allegations that:
REPRESENTATIVE CUT AND PASTED A CLIENT SIGNATURE FROM ONE DOCUMENT TO ANOTHER
In response to his former
employer's above disclosure, Richards provided the following BrokerCheck
statement:
THE INCIDENT CITED BY NFP AS THE REASON FOR MY TERMINATION OCCURRED 5 MONTHS PRIOR TO MY TERMINATION. WHEN IT OCCURRED IN SEPTEMBER 2012, I WAS CAUTIONED BY NFP AND TOLD THE MATTER WAS CLOSED. I BELIEVE THE ACTUAL REASON FOR MY TERMINATION CENTERED AROUND ISSUES WITH MY FATHER, WHO ALSO HAPPENED TO BE MY SUPERVISOR
FINRA Sanctions
FINRA deemed Richards above
conduct to constitute violations of NASD Conduct Rules 3030 and 2110 and FINRA
Rules 3270 and 2010. In accordance with the terms of the AWC, FINRA imposed
upon Richards a $7,500 fine and a 4-month suspension from association with any
FINRA member firm in any and all
capacities.
READ the BrokeAndBroker.com Blog "Outside Business Activity" Archive
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