Optional Comments on Your DRP: some are not an option

In Bill Singer's recent blog entry ("Regulatory Double Standard: Dissing your Settlement," 24 Mar 2008), he exposes FINRA's double standard in its enforcement practices. Mr. Singer tells the story of an industry heavyweight not being sanctioned or otherwise formally punished for remarks it made that violated the terms of its settlement agreement (it had agreed to not deny FINRA's allegations but then appeared to do just that). The story continues to show the flip side of enforcement...a registered rep was fined and suspended for doing the same thing, but in a different manner. On his U4, he denied the allegations named in his AWC (Acceptance, Waiver and Consent agreement). He did this in the "Comment (Optional)" question on the DRP. You should click this link and read Bill Singer's entry: it is interesting and provides a cautionary tale. http://www.rrbdlaw.com/brokeandbroker/index.php?a=blog&id=38

I'd just like to reiterate the lesson to be learned here.

Question 13 on the Regulatory Action DRP states, "Comment (Optional). You may use this field to provide a brief summary of the circumstances leading to the action as well as the current status or disposition and/or finding(s). Your information must fit within the space provided." After going through the lengthy and emotionally draining settlement process, some of you who stalwartly maintain your innocence may be tempted to include an optional comment such as, "I deny the allegations" or some similar, perhaps more veiled denial. Based on the disciplinary action described in Bill Singer's blog entry and his follow-up explanation of the implicit bargain struck in every AWC, this type of optional comment is NOT AN OPTION. (btw: Mr. Singer provided that explanation in response to my rant about reps having a right to free speech--I'm not an attorney and can sometimes get lost standing on a soap box).

So, following a final settlement with FINRA, make sure you live by the terms of that settlement, including not going around denying the allegations--especially on your U4. As Mr. Singer so eloquently put it, "It's a minor thing to ask someone to just keep their mouth shut and get on with their life."

Many thanks to Bill Singer for this lesson.