FINRA Sanctions Broker Over Undisclosed Outside Business Activities

FINRA suspended a former broker for failing to disclose outside business activities.

According to the AWC, the broker formed an LLC "to identify potential real estate investments," but used it to provide consulting services to a third-party administrator, earning "approximately $600,000" for strategic planning, administrative tasks, and customer referrals. FINRA found that the broker "did not notify" his employers that he was providing consulting services through the LLC. FINRA found that despite disclosing ownership of the LLC, the broker "falsely stated" his activities were "limited to real estate" and that he earned just $1,500 per year. FINRA also said the broker falsely claimed on several compliance questionnaires "that he had disclosed all outside business activities."

FINRA said that the former broker was still subject to its jurisdiction pursuant to agency By-Laws. 

FINRA determined that the broker violated FINRA Rule 3270 ("Outside Business Activities of Registered Persons") and Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To resolve the matter, the broker consented to a six-month suspension from associating with any FINRA member in any capacity and a $10,000 fine.