On December 15, 2014, the SEC affirmed a FINRA disciplinary action finding that a broker violated Conduct Rule 2110 when that broker downloaded certain confidential and nonpublic customer information for more than 2000 clients of his former firm, and then shared that information with his new brokerage firm. FINRA, though its National Adjudicatory Council, suspended the broker for 90 days and fined him $10,000, but declined to enforce the fine due to the broker's financial condition.
On appeal to the SEC, the SEC rejected the broker's arguments that the FINRA proceedings were unfair and that the findings of violation and imposition of sanctions were not reasonable. The SEC affirmed FINRA's findings.
This case is a good read for those brokers contemplating a transition from one firm to another, and underscores the regulators' commitment to enforce Regulation S-P and protect confidential client information. You can read the SEC opinion on the case here.
Before making a transition, be sure to understand what information you can and can't take with you, what the rules are, and how best to work to ensure a smooth transition.
The Beck Law Firm, LLC assists brokers in making transitions to new broker-dealers, incuding providing the broker with advice and counsel on the new registered representative agreement, promissory notes/forgivable loans, as well as with understanding his or her obligations to the former firm relating to covenants not to compete or solicit. We also work with our clients to help them resolve financial obligations (such as promissory notes) to the former firm, and registration issues, including Form U5 and Form U4 matters.