SEC Reduces Sanction Against Individual for Cheating on Series 24 Exam

The SEC reduced a permanent bar imposed by FINRA on an individual for misconduct during the Series 24 exam.

According to the Opinion of the Commission, the individual was hired into a role that required him to pass the Series 24 exam. The SEC stated that during a second attempt at passing the exam, the individual was captured on video writing on his driver’s license and on his body with a dry erase pen, and taking a 24-minute unscheduled break. The SEC said he passed the exam, but was caught by a proctor who reported the episode to FINRA.

FINRA’s Department of Enforcement charged the individual with violating NASD Rule 1080 and FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade"), and a FINRA hearing panel subsequently imposed a permanent bar for the misconduct. The SEC highlighted that, on appeal, FINRA’s National Adjudicatory Council affirmed the findings, citing "compelling circumstantial evidence" of cheating.

The SEC sustained FINRA’s finding that the individual violated FINRA Rule 2010 by breaching multiple Rules of Conduct during the exam. However, the SEC set aside FINRA’s finding that the individual violated NASD Rule 1080 and Rule 2010 by receiving assistance during the exam, concluding that the circumstantial evidence did not sufficiently establish that he actually received outside help during his unscheduled break.

The SEC found that the permanent bar imposed by FINRA was excessive due to the lack of sufficient evidence that the individual received outside assistance during the exam and instead reduced the sanction to a suspension ending on the date of the opinion.