I just finished reading through FINRA's monthly report of disciplinary actions for May. The cases were routine and ordinary, but one stood out as different.
Without admitting or denying the findings, a broker settled allegations that he "altered customer telephone records at his member firm by deleting or inaccurately updating the numbers to slow down other registered representatives at his firm that he believed would be assigned to call his customers after he resigned." FINRA found that by changing customer telephone numbers, the broker caused his firm to create and maintain inaccurate books and records. He was suspended for 30 days and fined $5,000. (FINRA Case #2007009372601). I think you see the lesson here. And if you're considering changing firms, chalk this one up in the list of things not to do.
I also noticed that there were several Form U-4 cases, wherein a broker would be suspended and fined, or barred, for material misrepresentations or omissions of fact on the Form U-4. These are easy cases for the regulators to investigate and prosecute, and they do them often. Now, with the recent revision to the Form U-4, and the requirement to make additional filings for the new questions, there may be at some point in the future a more broad review of Form U-4 disclosures (or non-disclosures) by the regulators.
I've written may times about U-4 issues, and the draconian punishment imposed if a broker is found to have "willfully" omitted or misrepresented something on the Form U-4. Brokers should understand the regulatory significance of this document, and ensure that they have accurately completed the document. If you have questions about the U-4, take a look at these posts here.
