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Did You Hear The One About The Solicited Order that Got Marked Unsolicited?

August 19, 2016

Ah yes, the old short-cut. Sure, you could go by the book and dot all your "i's" and cross all your "t's" but, you know, isn't it just easier to take the quick detour around all that nonsense? For example, once an order ticket is market "Solicited" there's a whole mess of nonsense that my brokerage firm puts into play. I gotta explain this. I gotta file that. I gotta get permission from some jerk who's always on the phone or in a meeting. If I just add "Un-" to the "Solicited," that would make my life a whole lot easier. You think so?

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, Joseph L. Bess submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Joseph L. Bess, Respondent (AWC 2014041059901, August 11, 2016).

In 2001, Bess entered the securities industry and by October 2012, he was registered with FINRA member firm J.P. Morgan Securities, LLC ("JPMS"), where he remained through April 2014, at which time he associated with FINRA member firm Waddell & Reed, The AWC asserts that Bess had no prior disciplinary history.

Unsolicited?

During the times relevant to this matter, the AWC asserts that JPMS maintained an approved list of securities that could be solicited, and in the event a trade marked "solicited" in any unapproved security was submitted, the firm's electronic order-taking system would reject the trade.

The AWC asserts that from January 2013 through January 2014, Bess marked 139 order tickets for 21 customers as "Unsolicited" for the purchase of Exchange Traded Funds ("ETFs").  The AWC alleges, however, that Bess had solicited from each of the customer accounts the cited ETF orders. Allegedly, he mismarked the nature of the order in order to circumvent JPMS's programmed rejection of solicited trades for unapproved securities. As a result, Bess also caused the firm to maintain inaccurate books and records.

Online FINRA BrokerCheck records as of August 19, 2016, disclose under the heading of "Employment Separation After Allegations," that JPMS marked Bess as a "Voluntary Resignation" on April 1, 2014, based upon allegations:

REGISTERED REP VOLUNTARILY RESIGNED WHILE UNDER INTERNAL REVIEW FOR ALLEGEDLY SOLICITING UNSUITABLE ANNUITY PRODUCTS AND FOR SOLICITING CLOSED END FUNDS WHICH WERE NOT ON FIRMS APPROVED SOLICITATION LIST AND MARKING THOSE SOLICITED TRADES AS UNSOLICITED.

Sanctions

FINRA deemed Bess's conduct to constitute violations of FINRA Rules 4511 and 2010. In accordance with the terms of the AWC, FINRA imposed upon Bess a $5,000 fine and a two-month suspension in all capacities.

Bill Singer's Comment

Not much to say about this one but there sure as hell are lots of songs with "Un" in the title. So . . . let's crank up the music:




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