Bad Brokers

According to FINRA, Thrivent Investment Management Inc. was censured and fined $325,000 for failing to establish and maintain a supervisory system reasonably designed to detect possible instances of signature forgery or falsification.

Firm registered representatives electronically signed customer...

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According to FINRA, Thrivent Investment Management Inc. was censured and fined $325,000 for failing to establish and maintain a supervisory system reasonably designed to detect possible instances of signature forgery or falsification.

Firm registered representatives electronically signed customer names on documents, including documents that were required books and records of the firm. While Thrivent's written supervisory procedures required representatives to obtain authentic customer signatures on firm documents, the procedures did not include any procedure to supervise the use of electronic signatures or provide reasonable guidance to supervisors on what to look for in assessing whether an electronic signature was genuine.

As a result, the firm did not reasonably investigate certain red flags contained in certificates of completion, such as instances where representatives sent a document from their work email address to an email address not recorded in the customer's account information (such as their personal email address), sent an authentication code to their own cell phone number, or instances where the representative's and customer's remote signatures were sent from the same IP address. The firm failed to detect that certain representatives sent documents requiring a customer's electronic signature to their own personal and work email addresses, sent corresponding authorization codes to their own phones, and then falsified or forged customer electronic signatures on firm documents.

FINRA noted that the falsifications and forgeries were not in furtherance of unauthorized activity, there was no customer harm, and no customer complained. Nevertheless, the maintenance of accurate books and records is a fundamental regulatory requirement, and the forgery of customer signatures, even without fraudulent intent, represents a serious breach of trust and compliance obligations.

This case highlights the challenges firms face in supervising electronic signature processes. While electronic signatures offer convenience and efficiency, they also create opportunities for abuse if not properly supervised. Firms must implement controls to verify that electronic signatures are actually being executed by customers, not by representatives on customers' behalf. Investors should be alert to requests to provide authentication codes or to sign documents through unfamiliar processes.

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According to FINRA, James Harry Mackellar was barred from association with any FINRA member in all capacities for refusing to provide information or documents requested by FINRA.

FINRA was investigating a complaint concerning Mackellar's alleged outside business activities involving a customer's ...

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According to FINRA, James Harry Mackellar was barred from association with any FINRA member in all capacities for refusing to provide information or documents requested by FINRA.

FINRA was investigating a complaint concerning Mackellar's alleged outside business activities involving a customer's estate and his indirect beneficial interest in that customer's accounts. When FINRA requested information and documents in connection with this investigation, Mackellar refused to provide them.

The duty to cooperate with FINRA investigations is fundamental to the self-regulatory system. FINRA relies on registered persons to provide truthful and complete information in order to effectively investigate potential misconduct and protect investors. When a registered person refuses to cooperate, it not only obstructs the specific investigation but also undermines the entire regulatory framework. The bar sanction is standard for refusal to cooperate because a person who will not participate in the regulatory process cannot be permitted to remain in the securities industry.

The underlying allegations in this case—involving a registered representative's outside business activities and beneficial interest in a customer's accounts—raise serious concerns about conflicts of interest and potential self-dealing. Registered representatives are required to disclose outside business activities to their firms so that the activities can be supervised and any conflicts of interest can be identified. Having a beneficial interest in a customer's account creates an obvious conflict that could lead to the representative placing personal interests ahead of the customer's interests.

Investors should be wary of any registered representative who suggests involvement in the customer's personal financial matters beyond the normal broker-customer relationship, such as serving as executor of an estate or having any beneficial interest in the customer's accounts. Such arrangements create conflicts of interest and opportunities for abuse. Customers who have concerns about a broker's conduct should report them to FINRA through its online complaint center.

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According to FINRA, Michael Gerard Gravelyn was barred from association with any FINRA member in all capacities for refusing to produce information and documents requested by FINRA.

FINRA's investigation arose from a Form U5 filed by Gravelyn's member firm. The Form U5 disclosed that Gravelyn had...

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According to FINRA, Michael Gerard Gravelyn was barred from association with any FINRA member in all capacities for refusing to produce information and documents requested by FINRA.

FINRA's investigation arose from a Form U5 filed by Gravelyn's member firm. The Form U5 disclosed that Gravelyn had been permitted to resign after a review of his business practices revealed that he had violated company policy. When FINRA requested information and documents to investigate the circumstances that led to the Form U5 filing, Gravelyn refused to provide them.

The refusal to cooperate with FINRA investigations is treated as one of the most serious violations a registered person can commit. FINRA's ability to protect investors depends on its ability to obtain information from registered persons who are under investigation. The securities industry operates under a self-regulatory model where FINRA, as the self-regulatory organization, conducts examinations and investigations to enforce compliance with securities laws and regulations. Registered persons agree to cooperate with these investigations as a condition of their registration.

Form U5 is the uniform termination notice that firms must file when a registered person's employment ends. When a Form U5 indicates that a person resigned after violating company policies, it raises red flags that warrant investigation to determine whether securities laws or regulations were violated and whether the person poses a risk to investors. By refusing to cooperate with FINRA's investigation, Gravelyn prevented FINRA from determining the full facts and circumstances of his conduct.

A bar from the securities industry means that Gravelyn cannot work in any capacity for any FINRA member firm. Investors can check the employment history and disciplinary record of any registered person through FINRA's BrokerCheck system, which includes information about terminations and bars. This public disclosure helps investors make informed decisions about who they trust with their investments.

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According to FINRA, Matthew Tze-Duhr Chen was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation concerned allegations reflected in a Form U5 filed by Chen's member firm. The Form U5 reported...

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According to FINRA, Matthew Tze-Duhr Chen was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation concerned allegations reflected in a Form U5 filed by Chen's member firm. The Form U5 reported that Chen resigned from the firm after allegations were made that he did not follow the firm's proper Safe Log Procedures and Non-Practice Relationship Policy. The Form U5 also disclosed that Chen resigned while under internal review for inaccurate documentation of activity notes and check receipts. The Form U5 further noted that while no clients were harmed, Chen attempted to defraud the firm through the payment of unearned compensation that was rightly due to his colleague.

When FINRA requested that Chen appear for on-the-record testimony to investigate these matters, he refused. On-the-record testimony is a critical investigative tool that allows FINRA to question individuals under oath about their conduct. The refusal to provide testimony is treated as seriously as the refusal to provide documents because it similarly obstructs FINRA's ability to investigate and protect investors.

The allegations underlying this investigation are concerning. Failure to follow firm procedures, inaccurate documentation, and attempting to obtain unearned compensation all suggest potential compliance and integrity issues. Even though the Form U5 stated that no clients were harmed, these types of violations can indicate a broader pattern of disregard for rules and honesty that poses risks to investors.

The decision to bar Chen means he cannot work in any capacity for any FINRA member firm. This protects investors from individuals who have demonstrated unwillingness to be accountable to the regulatory system. Investors should always verify their broker's background through BrokerCheck and should be alert to any red flags such as frequent job changes or regulatory disclosures.

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According to FINRA, Kevin Elijah Davis was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

The matter originated from a Form U5 filed by Davis's member firm, which disclosed that he had been terminated after ha...

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According to FINRA, Kevin Elijah Davis was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

The matter originated from a Form U5 filed by Davis's member firm, which disclosed that he had been terminated after having failed to timely disclose to the firm a loan made to a family member, in violation of firm policy. When FINRA sought to investigate this matter through on-the-record testimony from Davis, he refused to appear.

FINRA rules require registered persons to disclose certain personal financial matters to their firms, including loans that could create conflicts of interest or financial pressures that might affect their conduct. Firms need this information to properly supervise their registered representatives and identify potential risks. When a representative fails to make required disclosures, it prevents the firm from conducting effective supervision and may conceal financial difficulties that could motivate misconduct.

The refusal to testify compounds the original violation. If Davis had legitimate explanations for his conduct, the appropriate course would have been to appear for testimony and provide those explanations. By refusing to testify, Davis prevented FINRA from understanding the circumstances of the loan, whether it created any conflicts or risks, and whether there were any associated violations of securities laws or regulations.

The securities industry is built on trust, and registered persons must be transparent about their financial circumstances and business activities. Loans to or from family members can create complicated situations, particularly if the family member is also a customer or has connections to customers. While such loans are not necessarily prohibited, they must be properly disclosed so that firms can evaluate any potential conflicts and ensure appropriate supervision.

Investors should understand that their brokers are subject to disclosure requirements designed to identify potential conflicts and risks. When a broker fails to make required disclosures or refuses to cooperate with regulatory investigations, it raises serious questions about their trustworthiness and fitness to work in the industry.

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According to FINRA, Kris Min Lee-Kim was barred from association with any FINRA member in all capacities for refusing to produce information and documents requested by FINRA.

The matter originated from a Form U5 filed by Lee-Kim's member firm. The Form U5 disclosed that Lee-Kim was discharged for...

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According to FINRA, Kris Min Lee-Kim was barred from association with any FINRA member in all capacities for refusing to produce information and documents requested by FINRA.

The matter originated from a Form U5 filed by Lee-Kim's member firm. The Form U5 disclosed that Lee-Kim was discharged for allegedly violating the firm's policy regarding personal finances as it relates to Currency Transaction Reporting. When FINRA requested information and documents to investigate this matter, Lee-Kim refused to provide them.

Currency Transaction Reporting requirements are part of the Bank Secrecy Act and anti-money laundering (AML) framework that helps detect and prevent financial crimes. Financial institutions, including broker-dealers, must report currency transactions over $10,000 and must also be alert to patterns of transactions designed to evade reporting requirements (known as "structuring"). Violations of personal finance policies related to Currency Transaction Reporting could indicate attempts to evade these requirements or other suspicious financial activity.

The refusal to cooperate with FINRA's investigation prevented FINRA from determining the specific nature of Lee-Kim's conduct and whether it posed any risk to investors or violated securities regulations. FINRA's Rules of Procedure require associated persons to cooperate with investigations, and failure to do so is grounds for a bar from the industry. This requirement exists because self-regulation depends on the ability to obtain information from those being regulated.

The bar sanction means Lee-Kim cannot work for any FINRA member firm in any capacity. This protects investors and the integrity of the markets by removing from the industry individuals who will not submit to regulatory oversight. The self-regulatory system works only when registered persons are willing to be accountable for their conduct.

Investors can protect themselves by checking their broker's disciplinary history through FINRA BrokerCheck, which provides information about employment history, registrations, and any regulatory actions or customer complaints. Brokers who have been barred from the industry will appear in BrokerCheck with information about the bar.

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According to FINRA, Jesse Aaron Bray was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation concerned a disclosure reflected in a Form U4 amendment filed by Bray's member firm reporting that ...

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According to FINRA, Jesse Aaron Bray was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.

FINRA's investigation concerned a disclosure reflected in a Form U4 amendment filed by Bray's member firm reporting that he was charged with a felony. When FINRA requested that Bray appear for on-the-record testimony to discuss this matter, he refused.

Registered persons are required to disclose criminal charges and certain other events on their Form U4, which is the uniform application for securities industry registration. When a registered person is charged with a felony, it raises immediate concerns about their fitness to work in the securities industry and handle customer funds and securities. FINRA investigates these disclosures to understand the nature of the charges, assess the risk to investors, and determine whether any regulatory action is warranted.

The felony charge itself is a serious matter that could affect Bray's ability to continue in the securities industry, depending on the nature of the charge. However, the refusal to testify about the charge made it impossible for FINRA to evaluate the circumstances and make an informed determination about any risk to investors. By refusing to participate in the regulatory process, Bray demonstrated unwillingness to be accountable, which is incompatible with continued work in the industry.

A bar from the securities industry is permanent unless and until the individual applies for and is granted re-entry, which requires demonstrating rehabilitation and fitness. The bar appears on the individual's BrokerCheck record and serves as a warning to investors and firms.

Investors should always check their broker's background through BrokerCheck before opening an account or making investments. BrokerCheck provides information about a broker's employment history, licenses, and any regulatory actions, criminal charges, or customer complaints. A felony charge or bar from the industry are serious red flags that should be carefully considered.

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According to FINRA, Paul Robert Fehrenbach Jr. was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA in connection with its investigation into his failure to disclose a lien.

Registered persons are required to disc...

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According to FINRA, Paul Robert Fehrenbach Jr. was barred from association with any FINRA member in all capacities for refusing to provide documents and information requested by FINRA in connection with its investigation into his failure to disclose a lien.

Registered persons are required to disclose certain financial matters on their Form U4, including unsatisfied liens and judgments. These disclosure requirements help firms and regulators identify financial pressures that could motivate misconduct. A representative experiencing financial difficulties may be more likely to engage in unsuitable recommendations, unauthorized trading, or even outright theft in an attempt to generate commissions or obtain funds.

When FINRA became aware of Fehrenbach's failure to disclose a lien, it initiated an investigation to understand the circumstances. The investigation would have examined why the lien was not disclosed, whether the failure was intentional or inadvertent, what the lien related to, and whether Fehrenbach's financial situation created any risks to customers. By refusing to provide documents and information, Fehrenbach prevented FINRA from completing this assessment.

The duty to cooperate with FINRA investigations is not optional—it is a fundamental obligation of anyone who chooses to work in the securities industry. The self-regulatory system depends on registered persons being willing to be transparent and accountable. When someone refuses to cooperate, they are indicating that they are not willing to operate within the regulatory framework, and a bar is the appropriate response.

A lien represents a creditor's legal claim against property as security for a debt. Liens can arise from unpaid taxes, court judgments, or other debts. While having a lien is not itself a disqualifying event, the failure to disclose it is a violation because it deprives the firm and regulators of important information about the representative's financial condition.

Investors should understand that their brokers' financial stability matters. BrokerCheck allows investors to see disclosures about liens, bankruptcies, judgments, and other financial matters that registered persons are required to report. These disclosures can provide important context for evaluating whether to work with a particular broker.

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According to FINRA, Nicole Lynn Bolton was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation concerned Bolton's alleged participation in an undisclosed outside business activity. Bolton ackno...

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According to FINRA, Nicole Lynn Bolton was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA.

FINRA's investigation concerned Bolton's alleged participation in an undisclosed outside business activity. Bolton acknowledged receipt of FINRA's letter and requested a telephone conference to discuss a schedule for production of the requested information and documents and potential penalties for noncompliance. FINRA granted Bolton an extension to produce the information and documents requested. However, despite acknowledging the request and being granted additional time, Bolton never provided the requested information and documents to FINRA.

Outside business activities (OBAs) are employment or business activities outside the scope of a registered person's relationship with their firm. FINRA rules require registered persons to provide written notice to their firm before engaging in any OBA. This requirement exists so that firms can evaluate whether the OBA creates any conflicts of interest, makes excessive time demands that could interfere with the representative's responsibilities to customers, or otherwise poses risks. Some OBAs may be prohibited entirely, while others may be permitted with appropriate supervision.

When a registered person engages in an undisclosed OBA, it prevents the firm from conducting appropriate supervision and may conceal conflicts of interest or other problems. The activity could involve business dealings with customers that the firm is unaware of, creating opportunities for unsuitable recommendations or other misconduct. Even if the OBA is legitimate and poses no conflicts, the failure to disclose it is itself a violation of FINRA rules.

Bolton's initial engagement with FINRA—acknowledging the request and asking for an extension—makes her ultimate refusal to provide information particularly troubling. She had the opportunity to cooperate and chose not to, despite being given additional time. This suggests a deliberate decision not to cooperate rather than an inadvertent failure to respond.

Investors should be aware that their brokers are required to disclose outside business activities to their firms. If a broker suggests an investment or business opportunity outside of the firm, customers should verify whether the firm is aware of and has approved the activity.

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According to FINRA, Gary Alan Kieper was barred from association with any FINRA member in all capacities for refusing to provide on-the-record testimony requested by FINRA.

The AWC provides limited details about the underlying investigation, stating only that Kieper refused to testify when reques...

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According to FINRA, Gary Alan Kieper was barred from association with any FINRA member in all capacities for refusing to provide on-the-record testimony requested by FINRA.

The AWC provides limited details about the underlying investigation, stating only that Kieper refused to testify when requested. On-the-record testimony is a critical tool in FINRA's investigative process, allowing staff to question registered persons under oath about matters under investigation. The testimony becomes part of the official record and can be used in disciplinary proceedings or provided to other regulators.

The requirement to provide testimony is fundamental to FINRA's ability to fulfill its regulatory mission. Unlike many other legal proceedings where individuals have a right not to testify, registered persons in the securities industry have agreed as a condition of their registration to cooperate with FINRA investigations, including providing testimony when requested. This obligation is essential to the self-regulatory model under which the securities industry operates.

When a registered person refuses to testify, it not only obstructs the specific investigation at hand but also demonstrates a fundamental unwillingness to be accountable to the regulatory system. Someone who will not answer questions about their conduct cannot be permitted to continue working in an industry where investors must be able to trust registered persons with their money and investments.

A bar from the industry is FINRA's most serious sanction. It means Kieper cannot work for any FINRA member firm in any capacity—not as a broker, not as a supervisor, not even in a clerical role. The bar remains in effect unless and until Kieper applies for re-entry and demonstrates that he is fit to return to the industry, a process that requires showing rehabilitation and accepting responsibility for past misconduct.

Investors can check whether a broker has been barred or has any other disciplinary history through FINRA's BrokerCheck system, which is available for free online. BrokerCheck provides information about a broker's employment history, licenses, and any regulatory actions, criminal charges, or customer complaints.

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