According to FINRA, Jeremy Clay Burk was assessed a deferred fine of $5,000 and suspended for three months for engaging in outside business activities without providing written notice to his member firm.

Burk formed an insurance agency and served as its president and sole director. During this time, he opened at least one bank account and filed tax returns and corporate documents on behalf of the agency. He received compensation for these activities. Additionally, Burk worked as a loan officer and branch manager for two mortgage companies. He also leased office space in a building he owned to the mortgage companies and received wages and rent from them.

These outside business activities were outside the scope of Burk's relationship with his firm, yet he failed to provide prior notice, written or otherwise, to the firm about his involvement. The failure to disclose is particularly problematic because Burk also falsely attested in annual compliance questionnaires that he had not received compensation from any unapproved outside business activity.

Outside business activities must be disclosed to firms for several important reasons. First, they can create conflicts of interest. A representative operating an insurance agency or working for mortgage companies might be tempted to recommend products or services that benefit those businesses rather than what's best for clients. Second, outside activities can divide a representative's time and attention, potentially resulting in inadequate service to investment clients. Third, firms need to supervise outside activities to ensure they don't involve fraud or unsuitable recommendations.

The fact that Burk actively lied on compliance questionnaires makes this violation more serious than a simple oversight. False attestations indicate intentional concealment rather than an inadvertent failure to disclose. Compliance questionnaires are a key supervisory tool that firms use to monitor their representatives' activities. When representatives lie on these questionnaires, they undermine the entire supervisory system.

For investors, this case highlights the importance of asking financial professionals about their outside business activities. Representatives who operate insurance agencies, mortgage companies, or other businesses may have conflicts of interest in their investment recommendations. Investors should ask directly about outside activities and be cautious if a representative attempts to sell multiple financial products through different business entities. The suspension is in effect from May 16, 2022, through August 15, 2022.