According to FINRA, an Office of Hearing Officers decision found that Jason Lynn DiPaola should be fined $5,000 and suspended for 30 business days. Both DiPaola and FINRA appealed this decision to the NAC.

DiPaola was found to have failed to disclose an outside brokerage account in which he exercised discretionary authority. He traded with discretionary authority in his mother's securities account without her prior written authorization or approval from his member firm. While his mother gave him oral permission to trade in her account as he did in his own, oral permission is insufficient to properly authorize discretionary trading.

Additionally, DiPaola failed to disclose to the executing firm that he was exercising discretion and control over the trading in his mother's account while he was an associated person of another broker-dealer. This disclosure is required so the executing firm can properly supervise the account.

DiPaola also failed to accurately answer annual compliance questionnaire certifications. He disclosed his own outside brokerage accounts but failed to disclose his mother's account. DiPaola exercised de facto control over his mother's account by deciding the frequency and volume of trades he effected in the account.

The findings also included that DiPaola refused to appear and provide on-the-record testimony requested by FINRA. DiPaola had appeared and provided three on-the-record interviews about his trading, but failed to appear for a fourth interview.

The fact that both DiPaola and FINRA appealed the decision suggests disagreement about the severity of the sanctions. DiPaola may have believed the sanctions were too harsh, while FINRA may have believed they were too lenient given the multiple violations including refusal to testify.

Investors should understand that discretionary trading in accounts, even family member accounts, must be properly authorized in writing and disclosed to all relevant firms. The failure to disclose outside accounts prevents proper supervision and creates opportunities for misconduct to go undetected. Refusal to fully cooperate with regulatory investigations is an additional serious violation.