February 19, 2021
A Personal Note from Publisher Bill Singer: Some of you were wondering why I didn't comment on the above FINRA report when it was first released on February 17, 2021. After all, only a few days earlier I had unleashed "NEWSFLASH: FINRA Observes Bad Actors In The Markets" (BrokeAndBroker.com Blog / February 11, 2021) http://www.brokeandbroker.com/5692/finra-notice-fraud/
So . . . you're just going to have to pardon me if I don't strap on the irons and walk out into the middle of the street for another high noon encounter with yet another silly-assed FINRA report. Frankly, what's the point? The February 17th FINRA headline tells you just about all you need to know. Broken down into its self-obvious nonsense, the report attempts to alert us to the fact that, among other revelations, that a financial crisis is most likely to impact the young. Omigod, like who knew? You mean to tell me that those who tend to lack a lifetime of savings and have only recently entered onto the employment ladder may be less prepared financially for a crisis? Hold on -- lemme get something to write that down before I forget it. Another fabulous bit of research is that those with "lower incomes" are likely to struggle financially. Maybe I'm a bit dense but does that mean --dare I infer -- that those with "higher income" are better able to respond to a financial crisis? Pushing the broom behind the elephants in this FINRA circus parade is the truly breathtakingly stupid point that those "facing unemployment" will likely have "difficulty withstanding a financial crisis" -- ya think?
Someone actually paid to have this research done? Someone at FINRA truly believes that this crapola isn't a waste of time and money? Is there any accountability left at Wall Street's self-regulatory-organization? Keeping with the sage observation that a fish stinks from the head down, I have recently begun noting that FINRA's Board of Governors shows little if any interest in accomplishing enterprises of great pith and moment. As best I can tell, the Board is little more than a collegial debating society. Those who are actually elected, never quite seem to fulfill their many campaign promises to reform our industry and advance its best interests. Similarly, those who are appointed to fill a seat don't quite demonstrate any particular zeal in providing value for the honorarium that they receive. It's all so genteel. Which may explain why an effluent of insultingly obvious and ridiculous reports flow from FINRA without any reaction or response from any Governor. Y'all think this is money well spent -- and all the more so during these times of pandemic and financial crisis?
Bravo!!! FOX Business' Charles Payne says what virtually every industry professional knows or should know. Watch the video and appreciate that someone is finally speaking truth to power.
In the Matter of James Alan Schumaker, Respondent (FINRA AWC 2019061887701)
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, James Alan Schumaker submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that James Alan Schumaker entered the industry in 2017 and by September 2018, he was associated with Cambridge Investment Research, Inc. The AWC asserts that Schumaker "does not have any relevant disciplinary history." In accordance with the terms of the AWC, FINRA found that Schumaker violated FINRA Rule 2010, and the self regulator imposed upon him a $5,000 fine and a nine-month suspension from associating with any FINRA member in all capacities. The "Overview" of the AWC alleges in part that:
From September 2018 through February 2019, Schumaker permitted and enabled a former registered representative who had been barred and statutorily disqualified from the securities industry by FINRA to conduct a securities business. . . .
Bill Singer's Comment: As further detailed in the AWC, the former rep was Schumaker's father, who had been barred in 2014 for failing to respond to a FINRA inquiry involving alleged conversion. Apparently, James Schumaker became the "broker of record for his father's former customers . . . ;" however, the AWC alleges that the father attended "in-person customer meetings to discuss brokerage account strategy" and also emailed with customers about their account statements. Further, the father maintained an office at Schumaker's Cambridge branch. Despite having been warned by Cambridge following the firms branch audits that "his father could not be on the premises, use a conference room on the premises, or provide him with any investment advice . . .," the AWC alleges that when the next audit was conducted, Cambridge found the father on premises in a meeting with the son and customers.
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, James Scott Harrison submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that James Scott Harrison entered the industry in 1999 and from June 2007 to February 2016, he was registered with Kestra Investment Services, LLC, and thereafter, from April 2016 to June 7, 2019, with Securities America, Inc. ("SAI"). The AWC asserts that Harrison "has no relevant disciplinary history." In accordance with the terms of the AWC, FINRA found that Harrison violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010, and the self regulator imposed upon him a $5,000 fine and a six-month suspension from associating with any FINRA member in all capacities. The AWC includes this acknowledgment:
Respondent understands that this settlement includes a finding that he willfully omitted to state a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this omission makes him subject to a statutory disqualification with respect to association with a member.
In part, the AWC alleges that while Harrison was associated with Kestra and SAI, that he received six notices of federal tax liens and one notice of a civil judgment starting on respective datesw in June 2014 through March 2019. The liens totaled $227,000 and the judgment was for $31,783. As alleged in the AWC:
Although Harrison was required to disclose each lien and judgment via the filing of an amended Form U4 within thirty days of receiving notice of their existence, he did not. Harrison disclosed Liens 1, 4, 5, and the civil judgment only after they were brought to his attention by the firms' or FINRA's review, and the lateness of his disclosures ranged from four to eighteen months.
Harrison did not disclose Liens 3, 6, or 7, even though he received notice of Liens 3 and 6 while amending his Form U4 to disclose Liens 4 and 5. Harrison also falsely attested on six Kestra and SAI compliance questionnaires that he did not have any unsatisfied judgments or liens.
By willfully failing to disclose, or timely disclose, six federal tax liens and a civil judgment, Harrison violated Article V, Section 2(c) of FINRAs By-Laws and F1NRA Rules 1122 and 2010.
As guest blogger Aegis Frumento sees it, OJ Simpson's Los Angeles highway dash in his Ford Bronco and Donald Trump's speechifying to the crowd in Washington, DC may have quite a bit in common -- notwithstanding that OJ was being chased and Trump was standing at a lectern. The causes of action change. The forums changes. The burdens of proof change. All of which means that Trump may soon learn the same lesson that OJ Simpson learned: An acquittal in one forum won't protect you in another where different claims have different proof requirements.