Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
OUTSIDE BUSINESS ACTIVITIES
2012
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.
January 2012
Bradley John Delp
AWC/2009018233803
AWC/2009018233803
Delp failed to provide prompt written notice to his member firm that he
was employed by, or
accepted compensation from, another person as a result of outside
business activities.
Delp was a shareholder and employee of an
independent insurance
agency who brokered fixed-term or whole life settlements for his
insurance customers, and
his insurance agency received a commission for most of the life
settlement transactions
it brokered.
Many years after Delp
joined the firm and
disclosed his outside business activity, the firm revised its WSPs
to prohibit its registered
representatives from participating in life settlements unless
processed through the firm
and limited to products the firm offered through approved firm
sponsors.
Delp’s outside
business insurance company facilitated insurance company
customers’ sales of fixed-term
or whole life insurance policies to third-party companies. The
life settlements were not
brokered through the firm and most were not brokered with approved
firm sponsors as
required by the firm’s revised procedures.
Delp formed a
company in which he owned a half-interest. The company’s business
was to negotiate,
on behalf of Delp and other participating individual insurance
brokers, commission rates
from life insurance companies for insurance policies that they
brokered.
Delp’s administrative assistant completed online Firm Element
continuing education (CE)
training courses for him. FINRA also found that Delp used, or
directed his staff to use, copies
of signature transparencies for customers to generate third-party
checks, wire transfers
and to journal money from related customer accounts although the
customers had orally
authorized the transactions.
Bradley John Delp : Fined $25,000; Suspended 2 months
Cleves Richard Delp (Principal)
AWC/2009018233802
AWC/2009018233802
Delp failed to
provide prompt written notice to his member firm that he was
employed by, or accepted
compensation from, another person as a result of outside business
activities.
Delp was a shareholder and employee of an independent
insurance agency and
he disclosed his outside life insurance business activity to his
firm when he joined. As part
of his outside life insurance business, Delp brokered fixed-term
or whole life settlements
for his insurance customers, and his insurance agency received a
commission for most
of the life settlement transactions it brokered.
Many years
after Delp joined the firm and disclosed his outside business
activity, the firm revised its
WSPs to prohibit its registered representatives from participating
in life settlements unless
processed through the firm and limited to products the firm
offered through approved
firm sponsors. Delp’s outside business insurance company
facilitated insurance company
customers’ sales of fixed-term or whole life insurance policies to
third-party companies.
The life settlements were not brokered through the firm and most
were not brokered with
approved firm sponsors, as required by the firm’s revised
procedures.
Delp formed a company in which he owned a
half-interest. The company’s
business was to negotiate, on behalf of Delp and other
participating individual insurance
brokers, commission rates from life insurance companies for
insurance policies that they
brokered. Delp failed to reasonably enforce his
firm’s WSPs prohibiting
its registered representatives from participating in life
settlements, except with certain
limitations. Delp’s supervisory failure allowed another registered
representative in the
branch office that Delp supervised to also broker life settlement
transactions for several
years.
Cleves Richard Delp (Principal): Fined $20,000; Suspended 30 business days
Jimmy Mitchel Davidson
AWC/2010024519401
AWC/2010024519401
Davidson engaged in outside business
activities without providing
prompt written notice to his member firm.
Davidson began
creating Internet advertisements, which were not related to the
securities industry or
investments. In exchange for a fee, Davidson offered to create
advertisements, arrange for
the postings, with pictures, on various Internet sites, and assist
the advertisers in replying
to emails from potential customers. Davidson earned approximately
$6,000 for his outside
business activities.
Davidson
completed his firm’s annual
compliance questionnaires, on which he falsely represented that he
had not engaged in any
undisclosed outside business activity.
Jimmy Mitchel Davidson: Fined $7,500; Suspended 30 days
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