According to FINRA, Jimmie Scott Griffea was assessed a deferred fine of $2,500 and suspended for three months for willfully failing to amend his Form U4 to disclose that he had been charged with a misdemeanor.
The findings revealed that while associated with his member firm, Griffea was charged with one count of misdemeanor theft in U.S. District Court. Although Griffea was aware that he had been charged with a misdemeanor theft, he did not amend his Form U4 to disclose the charge within 30 days, as he was required to do. Ultimately, Griffea did not amend his Form U4 to disclose the misdemeanor charge at any point prior to resigning from the firm.
Form U4 is the Uniform Application for Securities Industry Registration or Transfer, which registered persons must use to register with FINRA and state securities regulators. The form requires disclosure of various events in an individual's background, including criminal charges and convictions. These disclosure requirements serve critical investor protection purposes by enabling firms, regulators, and investors to make informed decisions about whether to employ or do business with particular registered persons.
FINRA rules require registered persons to amend their Form U4 within 30 days of learning of any facts or circumstances that cause the information on the form to become materially inaccurate or incomplete. The requirement to disclose criminal charges—not just convictions—reflects the principle that such charges are relevant to assessing an individual's character and fitness for the securities industry, even before there is a final determination of guilt or innocence.
The charge of misdemeanor theft is particularly relevant to Griffea's fitness for the securities industry. Theft involves dishonesty and a disregard for others' property rights, which are incompatible with a position of trust in handling customers' financial assets. Firms and customers have a legitimate interest in knowing whether a registered person has been charged with theft, as this information is directly relevant to whether the person should be trusted with access to customer accounts and assets.
FINRA found that Griffea's failure to disclose was willful, meaning he knew he had been charged but consciously chose not to disclose this information. This willful concealment is more serious than a simple oversight or misunderstanding of disclosure requirements. By failing to disclose the charge, Griffea deprived his firm of the opportunity to evaluate whether he should continue in his position or whether additional supervision was necessary. He also deprived customers and others who might check his background of important information about his criminal charge.
The fact that Griffea never disclosed the charge at any point before resigning from the firm suggests he was attempting to hide this information for as long as possible. This conduct demonstrates poor judgment and a lack of honesty that are inconsistent with the high standards required of registered persons.
The three-month suspension and $2,500 fine appropriately address this willful failure to disclose. Investors should understand that they can and should check registered persons' backgrounds through FINRA's BrokerCheck system, which contains information from Forms U4 including disclosure of criminal charges and other relevant events. When registered persons fail to disclose required information, it undermines the effectiveness of this important investor protection tool.
