Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
December 2009
Jason Spencer May
AWC/2008013907501/December 2009
Mays
  • advised a customer to open an account at another FINRA member firm to reduce his options trading transaction costs,
  • accepted discretionary trading authority from the customer for the account, and
  • executed transactions in the customerís account at the other firm using the customerís login and password.
May did not
  • advise his member firm in writing that he had discretionary trading authority for the customerís account at another member firm prior to placing an order in the account, and
  • did not notify the firm where the account was opened that he was associated with another FINRA member firm.
Jason Spencer May: No Fine in light of financial status; Suspended 60 days
Tags:  Discretion     |    In: Cases of Note : FINRA
Bill Singer's Comment
If the broker-dealer community were operating under a Fiduciary Standard, one would have to ask how differently this case would be viewed.  For starters, registered persons would likely be required to direct clients to a firm where execution would be cheaper (barring any other important considerations beyond mere cost per trade).

However, finding a cheaper ticket price aside, FINRA is justified raising concerns about the other cited activity.  The undisclosed discretion exposes member firms to potentially serious liability.
Michelle Ruth Damon
AWC/2007010593201/December 2009
Damon exercised discretion in customersí accounts without having obtained written customer authorization that her firm would find acceptable. Damon exercised time and price discretion after the business day on which the customer granted such discretion without the customerís written authorization.
Michelle Ruth Damon: Fined $10,000; Suspended 10 business days in all capacities
Tags:  Time And Price Discretion     |    In: Cases of Note : FINRA
November 2009
Donald Louis Andersen
AWC/2007010593701/November 2009
Andersen exercised discretion in customersí accounts without first having obtained written customer authorization that his firm would find acceptable and, without the customerís written authorization, exercised time and price discretion after the business day on which the customer granted discretion.
Donald Louis Andersen: Fined $10,000; Suspended 10 business days in all capacities
Tags:  Discretion    Time and Price Discretion     |    In: Cases of Note : FINRA
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