Securities Industry Commentator by Bill Singer Esq

June 1, 2020
Morgan Stanley is planning to bring traders back to New York headquarters next month, sources say (CNBC by Hugh Son)
As CNBC's Son reports in part:

When workers do return to Morgan Stanley, they will find an office that's very different from the one they left: Employees will have to queue up to get their temperatures checked before entering the building.

Inside, signage will direct people where to walk so they don't bump into each other. Only two or three people will be allowed in an elevator at a time. Employees will get welcome kits with masks and hand sanitizer, and will be required to wear masks in most situations except when sitting at desks, the people said.
FINRA arbitrators have the power to refer to FINRA for investigation any matter or conduct that has come to an arbitrator's attention during and in connection with the arbitration. Unfortunately, arbitrators rarely undertake regulatory referrals; and, FINRA displays no interest in investigating or sanctioning its member firms' defamatory / materially false statements filed on Form U5 or with the Central Registration Depository ("CRD"). In contrast, FINRA fines, suspends, and bars associated persons when they file false disclosures on their Forms U5 or via CRD, or on their firm's annual compliance questionnaires. Yet another example of FINRA's disparate treatment of its member firms and their disenfranchised associated persons.

FINRA OHO Fines and Suspends Rep Over Disclosures of Tax Liens and Warrants. FINRA Department of Enforcement, Complainant, v. Michael Patrick Murphy, Respondent (FINRA Office of Hearing Officers Hearing Panel Decision , Discip. Proc. No. 2017053843901)
As set forth in the "Introduction" portion of the OHO Decision [Ed: footnotes omitted]:

FINRA's Department of Enforcement filed a Complaint against Respondent Michael Patrick Murphy, a registered representative and principal of a FINRA member firm. In a single cause of action, the Complaint alleges that from February 2014 through May 2018, Murphy failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (Form U4) to disclose three federal income tax liens filed by the Internal Revenue Service ("IRS Liens") and four tax warrants filed by the New York State Department of Taxation and Finance(also alleges that Murphy provided inaccurate information when he updated his Form U4 to disclose six of the seven Liens.The alleged failures to update and the inaccurate update constituted an allegedly willful violation of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.

Murphy denied the charges, and a hearing was held before a FINRA Hearing Panel. At the hearing, Murphy contended, among other things, that he was not subject to any tax liens and that his failure to disclose any such liens did not violate FINRA By-Laws or Rules. 

After carefully considering the hearing testimony, the hearing exhibits, and the parties' pre-hearing and post-hearing briefs, the Hearing Panel finds, as explained below, that Enforcement established Murphy's willful violation of Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010, by failing to timely amend his Form U4 to disclose the Liens and later providing inaccurate information when he amended his Form U4. Based on this finding, the Hearing Panel fines Murphy $20,000 and suspends him from associating with any FINRA member in any capacity for six months. 

Bill Singer's Comment: Compliments to FINRA on crafting a thoughtful, patient, and compelling Decision replete with sufficient content and context. Pointedly, I note the Panel's articulate presentation of this portion of its rationale [Ed: footnotes omitted]:

The Hearing Panel finds that aggravating factors predominate in Murphy's failure to
timely amend his Form U4 and his inaccurate amendment. The undisclosed information about the Liens was significant. The total amount of the Liens -- $6,031,387 -- was staggering. The number of the Liens -- seven -- and the length of time the Liens were not disclosed-up to four years-would raise serious questions about Murphy's ability to manage his financial affairs, the financial pressures he was facing, and his ability to comply with FINRA By-Laws and Rules. Murphy's omission included both federal and state tax liens. He did not accept responsibility for his misconduct and did not disclose the Liens even after FINRA gave him notice of them in RAD disclosure letters and FINRA Rule 8210 requests, showed him the Lien documents in his OTR, and sent his attorney the Lien documents in another FINRA Rule 8210 request.

Murphy did not update his Form U4 even though FINRA had warned him on a number of occasions that he was required to do so. The Hearing Panel finds it deeply troubling that Murphy still failed to timely amend his Form U4 after a cause examination had begun. His continued defiance despite the regulatory pressure brought to bear on him-reflects a conscious decision not to disclose the Liens, most likely to avoid harm to his businesses. He misrepresented the date that he learned of the Liens, demonstrating his lack of regard for FINRA By-Laws and Rules. He falsely stated the date was April 19, 2018, within 30 days of the date he amended his Forms U4. 

At pages 29 - 30 of the OHO Decision

SEC Denies Whistleblower Award
In the Matter of the Claim for an Award in connection with [REDACTED] (SEC Order Determining Whistleblower Award Claim; '34 Act Rel. No. 88973; Whistleblower Award Proc. File No. 2020-19)
The SEC's Claims Review Staff ("CRS") recommended the denial of a whistleblower award to Claimant, who timely contested that Preliminary Determination; thereafter, the SEC ultimately denied the Award. As alleged in the SEC Order, the federal regulator received an anonymous complaint, which prompted the initiation of a "cause examination" by its Office of Compliance Inspections and Examinations ("OCIE"), which subsequently referred the matter to the Division of Enforcement. The Order alleges that Claimant's: 

tip was not received by the Commission until more than a year after the anonymous complaint had been received, after the OCIE cause examination had been completed, and five months after staff in the Division of Enforcement had opened its investigation. By the time Claimant's tip was submitted to the Commission, the investigative staff was already aware of the issues raised by Claimant as a result of the anonymous tip, the OCIE examination and the staff's own investigative efforts. In addition, the information in Claimant's tip and that Claimant provided in a subsequent meeting with the staff did not significantly contribute to the success of the Covered Action.

At Page 2 of the SEC Order

Having concluded that no examination or investigation was opened based upon Claimant's information, and because Staff was aware of the information provided prior to Claimant's submission, the SEC determined in part that:

[C]laimant's information did not allow the staff to conserve a significant amount of time or resources in the investigation, nor did it allow staff to bring additional charges or charges against additional defendants. Moreover, Claimant did not provide the staff with any information concerning the other key elements of the case

At Page 4 of the SEC Order