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.
Scott Roy Pierson AWC/2009020572801/September 2011
Pierson administered an insurance company’s insurance CE instruction program for his member firm, and because of a heavy workload, he got behind in the administration of the program, resulting in expired courses being taught and the late filing of courses, instructor approval requests and attendance rosters with states. To cover up these problems, Pierson issued false CE completion certificates to course attendees and substituted on CE completion certificates the names of state-certified instructors for courses uncertified instructors taught.
CE courses require annual or biannual renewals in some states, and Pierson allowed courses to expire without renewal. Pierson wasn’t aware the courses had expired until after they had been taught. On one occasion Pierson issued certificates of completion for approved courses as opposed to the expired courses that were actually presented and did this over approximately a five-year period.
On one occasion Pierson issued CE completion certificates to course attendees for one hour of credit that had not been taught. In addition, Pierson substituted the names of state-certified instructors on CE completion certificates to conceal the fact that the instructors who actually taught the courses were not certified at the time the courses were taught.
Scott Roy Pierson : Fined $15,000; Suspended 1 year; Required to requalify as an investment company/variable contract products representative.
Dennis Osborn Beadle AWC/2009021029706/August 2011
Beadle used an answer key to complete a state insurance continuing education (CE) exam.
Certain states began requiring financial advisors to complete a long-term care (LTC) CE course and exam before selling LTC insurance products to customers who reside in those states. Beadle was advised that he would be required to complete the LTC CE exam for a particular state before he was able to complete the sale of a policy to a colleague’s relative. Beadle received an email from a wholesaler that included a copy of the state’s LTC CE exam questions, with the answers filled in by hand. Beadle used the answer key to complete the state’s LTC CE exam.
Dennis Osborn Beadle: Fined $5,000; Suspended 1 month
Jacen Darrel Work (Principal) AWC/2009021029621/August 2011
Work requested and received the answer key for a state’s LTC CE exam and distributed it to a financial advisor outside of his member firm.
Certain states began implementing a LTC CE requirement that obligated financial advisors to complete a LTC CE course and exam before selling LTC insurance products to customers who resided in that state. In order to help financial advisors obtain the LTC CE requirement, Work’s firm provided them with vouchers that allowed financial advisors to take the CE exams for free through a specific company. In addition to providing financial advisors with vouchers, certain firm employees improperly created, requested, received and distributed the answer keys for state LTC CE exams.
Jacen Darrel Work (Principal): Fined $5,000; Suspended 1 month
Poland allowed a representative of a non-FINRA member insurance company to improperly assist him in completing a state insurance LTC CE exam.
The representative sat with Poland for half of the time it took him to complete the exam, and the two discussed the topics covered on the exam, and as a result, Poland received assistance on some of the answers on the exam. After completing the exam, Poland completed an exam certification form/declaration of compliance, and despite having received assistance on the exam, he signed the form and inaccurately certified that he completed the exam without assistance from any outside source.
John Stultz Poland : Fined $5,000; Suspended 1 month
Philip Kenneth Mahler (Principal) AWC/2009017244601/June 2011
Mahler improperly created answer keys to state insurance continuing education (CE) exams a company administered.
The company’s president approached Mahler on different occasions and offered to provide him with answers to the company’s CE exams. The president provided Mahler with the answers to the CE exams over the phone or by handing copies of the answers to Mahler, and Mahler used these answers to create answer keys for the exams.
Mahler improperly distributed the answer keys to an employee at his member firm and to multiple registered representatives outside of his firm. On multiple occasions, while he was an external wholesaler, Mahler provided assistance to non-firm registered representatives while they were taking a state annuity examination for CE credit. Mahler was in the offices of some registered representatives while they were taking the annuity examination; some of these registered representatives asked Mahler to give them the answers to certain of the questions on the examination, which Mahler provided.
Mahler failed to supervise in that he gave one direct report answer keys to state insurance CE exams.
Philip Kenneth Mahler (Principal): Fiend $10,000; Suspended 4 months in all capacities; Suspended 6 months in Principal/Supervisory capacities only (to run concurrently)
FINRA arbitration Decisions tend to be unanimous, but, with increasing frequency, we are seeing decisions by two of three arbitrators -- and there has been an increasing number of written dissents published. Although it would be preferable for rulings to be unanimous, this trend towards split decisions is encouraging because it shows ind... Read On