According to FINRA, Rajen Duggal (CRD #6505933), based in Modesto, California, was sanctioned on January 17, 2024, through a Letter of Acceptance, Waiver and Consent (AWC). Duggal was assessed a deferred fine of $5,000 and suspended from association with any FINRA member firm in all capacities for 30 days.

FINRA found that Duggal engaged in an outside business activity (OBA) without providing prior written notice to, and receiving his member firm's approval of, the outside activity. The findings stated that Duggal began working with a startup business in an investor-relations role and had the expectation that his efforts on behalf of this startup would lead to compensation. During the time that Duggal worked for the startup and remained associated with his firm, he received approximately $80,000 in compensation from the startup.

In addition to failing to disclose the OBA, Duggal completed a firm questionnaire in which he falsely stated that he was not engaged in any outside business activities, actively concealing from the firm his work for the startup. Duggal eventually disclosed the OBA to his firm, which resulted in his termination.

FINRA Rule 3270 requires all associated persons to provide prior written notice to their member firm before engaging in any business activity outside the scope of their relationship with the firm. This rule is a critical component of the regulatory framework because it enables firms to evaluate potential conflicts of interest and to supervise activities that could affect their customers. An investor-relations role at a startup is particularly noteworthy because it could involve activities that intersect with securities regulations, such as communications with potential investors.

The false statement on the firm questionnaire is an aggravating factor in this case. Compliance questionnaires are designed as internal controls to help firms identify and manage risk. When brokers provide dishonest answers, they compromise the firm's compliance program and potentially expose customers to unmonitored risks.

For investors, this case is a reminder that financial professionals are required to disclose their outside activities to their employers. This transparency requirement exists to protect you. If your broker is engaged in undisclosed outside activities, particularly ones involving investor relations, it could create conflicts of interest that affect the advice you receive. Investors can use FINRA's BrokerCheck tool to review their broker's background and identify any history of regulatory actions.

The suspension was in effect from February 5, 2024, through March 5, 2024 (FINRA Case #2023078112801).