Broker Settles FINRA Charges for Misrepresenting Account Details

A broker, who managed accounts for two customers who were employed by another brokerage firm, settled FINRA charges for negligent misrepresentations made in attestation letters concerning the nature of the accounts.

According to the AWC, the accounts were discretionary and both customers retained the ability to place self-directed trades. FINRA stated that the customers asked the broker to provide letters of attestation for their employer confirming the nature of their accounts, specifically that the accounts were "were managed or self-directed." FINRA stated that the broker understood that the letters would be used by the customers' employer to supervise their trading activity. FINRA found that without seeking his firm's required approval, the broker drafted, signed and sent letters on firm letterhead that inaccurately stated the customers did not "have the ability to self-direct trades" in their discretionary accounts.

FINRA concluded that the broker violated FINRA Rule 2010 ("Standards of Commercial Honor and Principles of Trade").

To settle the charges, the broker agreed to (i) a three-month suspension in all capacities and (ii) a $5,000 fine.