FINRA Fines and Suspends NRF for Having Access to Cell Phone at Home

There are few folks lower on Wall Street's totem pole than the non-registered fingerprint person ("NRF") -- the role is so inconsequential that the acronym fails to reference the "P" in personhood. As such, an NRF is less a person and more a fingerprint. Recently, one such NRF was fined $5,000 and suspended for 18 months by FINRA. Why? Well, according to the published regulatory settlement, this NRF "had access" to a cell phone while taking an industry qualification exam. Not that he used the phone. Not that he cheated. Not that he knew he had the phone. Only that he had access to it -- that he possessed it.

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, Bryan Adem Joseph submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. 
In the Matter of Bryan Adem Joseph, Respondent (FINRA AWC 2023077842701)
https://www.finra.org/sites/default/files/fda_documents/2023077842701
%20Bryan%20Adem%20Joseph%20CRD%207505049%20AWC%20gg.pdf The AWC asserts that in 2022, Bryan Adem Joseph was a non-registered fingerprint person ("NRF") with Fidelity. As alleged in part in the AWC:

On July 1, 2022, Joseph took the Series 7 examination at his home, using a remote delivery platform. Prior to beginning the examination, Joseph attested that he had reviewed and would abide by the Rules of Conduct, which require candidates to store all personal items outside the room where they take the examination and prohibit access to personal items, including cell phones, during the examination. Prior to beginning the examination, Joseph also told the proctor that his cell phone was stored in another room. During the examination, Joseph possessed and had access to his cell phone. By possessing a cell phone during the Series 7 examination, Joseph violated FINRA Rule 1210.05 and Rule 2010, both independently and by virtue of his violation of Rule 1210.05.

FINRA Sanctions

In accordance with the terms of the AWC, FINRA imposed upon Bryan Adem Joseph a $5,000 fine and an 18-month suspension from associating with any FINRA member in all capacities.

Bill Singer's Comment

Two Cheaters

Oh my, how time time flies! It seems like only yesterday when FINRA published "FINRA Bars Two Individuals for Cheating on Online Qualification Exams Regulator’s First Enforcement Actions for Online Cheating" (FINRA News Release / July 13, 2022)
https://www.finra.org/media-center/newsreleases/2022/finra-bars-two-individuals-cheating-online-qualification-exams
As to those lucky, first two barred cheaters, let's take a quick stroll down FINRA's memory lane:

• In the Matter of Harris Kausar, Respondent (FINRA AWC 2022073741702)
  https://www.finra.org/sites/default/files/2022-07/kausar-awc-2022073741702.pdf 
  

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, Harris Kausar submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Harris Kausar was a non-registered fingerprint ("NRF") person in 2020 and then sought to become registered in 2021 with Barclays Capital Inc. In accordance with the terms of the AWC, FINRA imposed upon Kausar a Bar from associating with any FINRA member in all capacities. As alleged in part in the AWC:

Kausar took the FINRA Series 79 Investment Banking Representative Exam on December 26, 2021. Kausar had been provided an accommodation to take the exam online rather than in person. Prior to beginning the examination, Kausar attested that he had read and would abide by the FINRA Rules of Conduct. These rules require candidates taking online examinations to store all personal items outside the room in which they take the exam, and prohibit any use, attempted use, or access to personal items, including electronic devices or phones to access the internet during the examination. During the examination, Kausar accessed the internet, including online forums, to assist with answering examination questions. Therefore, Kausar violated FINRA Rules 1210.05 and 2010

• In the Matter of Brandon Autiero, Respondent (FINRA AWC 2022073741701)
  https://www.finra.org/sites/default/files/2022-07/autiero-awc-2022073741701.pdf

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, Brandon Autiero submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Brandon Autiero was first registered in 2021 with Equitable Advisors, LLC. In accordance with the terms of the AWC, FINRA imposed upon Autiero a Bar from associating with any FINRA member in all capacities. As alleged in part in the AWC:

Autiero took the FINRA Series 7 examination on March 18, 2021, the NASAA Series 66 examination on June 15, 2021, July 21, 2021, and September 8, 2021, and the NASAA Series 63 examination on September 27, 2021. In each instance, Autiero had been provided an accommodation to take the examination online rather than in person. Prior to beginning each examination, Autiero attested that he had read and would abide by the relevant Rules of Conduct. These rules require candidates taking online examinations to store all personal items outside the room in which they take the exam, and prohibit any use, attempted use, or access to personal items, including electronic devices or phones to access the internet during the examination. During each qualification examination, Autiero accessed the internet, including online forums, to assist with answering examination questions. Therefore, Autiero violated FINRA Rules 1210.05 and 2010 while taking the Series 7 exam and FINRA Rule 2010 while taking the Series 66 and Series 63 exams.

In both Autiero and Kausar, FINRA imposed the ultimate sanction of a Bar; and, as noted in the July 13, 2022, FINRA News Release:

"Test cheaters are on notice: regardless of the testing environment, FINRA remains vigilant in our efforts to detect cheating and will vigorously pursue disciplinary action – including permanent bars – against any individual who cheats on qualification examinations,” said Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement.

Oh my!!! FINRA put all test cheaters on notice that the regulator remains vigilant and will go so far as to impose a Bar. All of which prompts me to ask why NRF Joseph was only fined and sanctioned. And in looking for the answer to that question, things sort of get interesting. 

Possessing a cell phone

I've read the Joseph AWC several times; but despite my dogged determination, all FINRA's rationale for imposing a $5,000 fine and an 18-month suspension appears to be based upon this:

By possessing a cell phone during the Series 7 examination, Joseph violated FINRA Rule 1210.05 and Rule 2010 . . .

Ummm . . . you fined an NRF $5,000 and slammed they guy with an 18-month suspension merely for "possessing a cell phone" during the exam?

In fact, the AWC does not allege that Joseph used the cell phone.

The AWC does not allege that Joseph had knowingly hid -- as in intentionally secreted -- his cell phone and used it to cheat.

The AWC doesn't even allege that Joseph knew that he had possessed a cell phone during the Series 7 -- for all we know, he forgot that it was in his back pocket or sitting in the charger ten feet across the room. 

If you think that I'm overstating the dearth of allegations in the AWC, go ahead and read it for yourself -- then cite to me the language where FINRA says that Joseph knew he had the cell phone in the room or that he even used it during the Series 7.

Accessing the Internet

In the Autiero AWC and Kausar AWC,  the allegations were that each Respondent had "accessed the internet, including online forums, to assist with answering examination questions." In contrast, the Joseph AWC alleges that prior to "beginning the examination, Joseph told the proctor that his cell phone was stored in another room [but] Joseph possessed and had access to his cell phone." Notably, the strained language of the AWC does NOT allege that Joseph actually accessed the cell phone but only that he "had access" to the device. Perhaps Joseph knowingly lied to the proctor and had his cell phone on his desk while he was taking the Series 7 and cheated. If that's the case, then why the hell doesn't the AWC say as much?

Joseph AWC: Bereft of Facts

The Joseph AWC is so bereft of a fact pattern that I am unable to reconcile the self-regulatory-organization's imposition of a $5,000 fine and an 18-month suspension with the possibility that an NRF may have had his cell phone sitting in a charger 20 feet away from his desk while he took the Series 7. Again, there is no allegation that Joseph cheated. This regulatory kerfuffle as set forth in the AWC is about someone having access to a cell phone but apparently not making use of the device in order to cheat.  Making matters worse, we're all left to wonder just how the hell FINRA found out that Joseph even had a cell phone in the room.

In fairness to FINRA, the fine and suspension may well be appropriate; but that's a concession solely based upon I don't know what I don't know (and I don't know what the AWC didn't allege). Moreover, the AWC discloses that Respondent Joseph was represented by legal counsel; and, as such, if Joseph is happy with the sanctions, it's not my place to question the wisdom of that choice. For all I know (or don't), the AWC is the byproduct of some deft lawyering, and the benefit of the bargain bestowed upon Respondent Joseph is a muddying of what did or didn't happen with his cell phone during the remote testing at his home.

• FINRA
• cell phone
• series 7
• Rule 1210
• BrokeAndBroker
• Bill Singer