CSG Law Alert: FINRA’s New Favorite Violation
Recently, FINRA issued a letter of Acceptance, Waiver, and Consent (AWC) charging a broker with violating FINRA’s ethics rule, Rule 2010. In the Albert Mosseri AWC, FINRA alleged that the broker, who also was licensed to sell insurance, acted unethically by certifying that he had completed 15 hours of insurance-related continuing education (CE) when, in fact, another person had completed the CE on his behalf. FINRA suspended the broker one month and fined him $5,000.
Why is this significant?
This is not the first time this year that FINRA has charged a broker with violating Rule 2010 by having another person complete the broker’s state-mandated CE. Since January 1, 2024, FINRA has issued nearly identical AWCs against 53 other registered persons. In each case, FINRA alleged that the respondent certified to the State of New York that he or she had completed the CE required to renew their New York state insurance license when, in fact, another person had completed the CE. And, in each case, FINRA imposed the identical sanction: a one-month suspension from associating with a FINRA member in all capacities and a $5,000 fine. Notably, each of the 54 matters was generated from a disclosure made by the broker’s employing firm pursuant to Rule 4530.
Ordinarily, such a seemingly prosaic charge might not be worth a second glance. But where, as here, FINRA has brought the identical charge 54 times—amounting to roughly one in five of all the AWCs it has issued against individuals this year—it is worth paying attention. There are hundreds of persons registered with FINRA who also hold licenses to sell insurance in one or more states. If you are such a person, you should be mindful that FINRA Enforcement can and will bring an enforcement action against you—and will suspend you from acting as a securities broker—if you engage in misconduct that pertains only to your insurance business and licensure requirements. If you are a broker-dealer who employs such persons, it might be a good time to remind your staff of the potential FINRA consequences of having someone else complete their state-mandated CE or qualification exams.