Brokers and registered representatives who are dealing with past or present criminal cases need to understand a few things about how their criminal case - even those seemingly unrelated to the financial services industry - affects their ability to be associated or registered with a broker-dealer. The reality is that an unrelated conviction can have significant consequences to a broker's ability to work in the industry. Here's a high level overview of some of the key issues:
* A person convicted of any felony is generally statutorily disqualified from being associated (and registered) with a broker-dealer for ten years.
* A person who enters a plea of nolo or guilty to any felony and to certain misdemeanors, and who is sentenced under a court program (such as deferred adjudication, some first offender programs, etc.) that will later result in no conviction and having the case dismissed, may be disqualified from being associated with a broker-dealer for a period of time (commonly during the period of probation before the case is dismissed).
* A person convicted of certain misdemeanor offenses may be disqualified for ten years.
* Criminal charges and convictions not properly reported on the Form U4 might result in disciplinary action against the broker as well (See the U4 category of the blog for more info. on that area).
By way of example, a felony conviction for possession of cocaine generally results in a disqualification. A misdemeanor theft conviction might also result in disqualification. Neither of these cases seem to have anything to do with the financial services industry, but they nevertheless might prevent a person from entering the field, or continuing their work in the industry, at least for a period of time.
If you have a disqualifying criminal event in your history, it may prevent you from being eligible to work in the industry, at least for some time, absent obtaining special approval through an Eligibility Proceeding (also known as an MC400 proceeding) with FINRA and the SEC. If dealing with a current case that has not yet resolved, it is important to understand what result is disqualifying and what is not, so that you can seek to negotiate or obtain the best possible outcome that would still allow you to be eligible to continue working in the industry.
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