According to FINRA, Jayanth Hebbar was fined $10,000 and suspended for six months on March 1, 2022, for failing to obtain his firm's written consent before opening or maintaining outside brokerage accounts and for violating firm trading policies.

Before joining his firm, Hebbar had established nine outside brokerage accounts. He disclosed only one on his New Hire Compliance Questionnaire and never obtained written consent to maintain the other eight accounts. He also opened three additional outside accounts after joining the firm without obtaining prior written consent. For one account, Hebbar misrepresented his employer and occupation on opening forms and failed to disclose his association with the firm.

Hebbar failed to notify in writing the financial institutions where he held 10 of the 11 undisclosed accounts that he was associated with a FINRA member firm. He also executed trades in securities on his firm's Expanded Watch List and Restricted List in violation of firm policies, failed to pre-clear transactions in the undisclosed accounts, and did not adhere to required holding periods.

Additionally, Hebbar signed compliance questionnaires falsely attesting that he had disclosed all outside employee and employee-related accounts.

The requirement to disclose outside brokerage accounts enables firms to monitor their representatives for conflicts of interest, insider trading, and other violations. When representatives maintain secret accounts, they can engage in trading that would be prohibited if the firm knew about it.

Trading in securities on watch lists and restricted lists violates policies designed to prevent insider trading and conflicts of interest. By maintaining undisclosed accounts, Hebbar evaded these important investor protection controls.

This case illustrates that registered representatives cannot avoid firm supervision by simply failing to disclose outside accounts. Such conduct prevents firms from monitoring for violations that could harm investors or markets. Investors should understand that their financial professionals are subject to trading restrictions designed to prevent conflicts of interest and ensure they prioritize client interests.