Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2010
NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
February 2010 - View all for this month
Kathryn Lorraine Ellis
AWC/2007007345602
Ellis signed Employee Acknowledgements and Municipal Finance Professional Acknowledgements on behalf of firm registered representatives without their permission; and then provided the forms to FINRA staff during her firm’s bi-annual routine cycle examination without informing FINRA staff that she
had signed the representatives’ names without their permission.
Kathryn Lorraine Ellis: Suspended 9 months
Bill Singer's Comment
Okay...so...FINRA Staff is on-premises conducting the bi-annual Cycle Examination and the regulator asks for some forms, which are supposed to attest to an RR's compliance with various regulatory disclosures, and the attestation is so onerous that the RR is required to affix his or her own signature to the form.  Hmmm, lemme see, how should you react?

Possible suggestion #1:  Forge the RR's name to the form and cross your fingers behind your back when you hand the documents to FINRA (and, for added measure, don't tell the regulator that you sort of forged the signatures).

Possible suggestion #2: Run into your boss's office, in a panic, and tell him or her that the firm is in trouble because someone forgot to get signed forms. Keep FINRA's staff waiting for an hour or so while you try to get your outside lawyer on the phone.

Possible suggestion #3:  Have that smug smirk on your face because you anticipated that FINRA would likely be on premises soon and did a dry-run to spot any compliance shortcomings before the regulator did -- and you made sure that all required, signed forms were in the firm's file.
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