According to FINRA, Lisa Marjorie Jones was fined $5,000 and suspended from association with any FINRA member firm for two months for engaging in an undisclosed outside business activity.

Jones had disclosed to her firm that she created an LLC to operate an e-commerce storefront and used services from a company owned by three other firm representatives to manage it. However, she failed to disclose that she subsequently began referring other representatives to this company in exchange for referral fees.

Between August 2021 and February 2023, without informing her firm, Jones told other representatives about the services and received at least $16,000 in referral fees for successfully referring five representatives to the company. During this same period, Jones affirmed on annual compliance questionnaires that she had completely and accurately disclosed her outside business activities, when she had not disclosed the referral fee arrangement.

FINRA rules require representatives to provide written notice of all outside business activities so firms can evaluate potential conflicts of interest and determine whether additional supervision is needed. Making false statements on compliance questionnaires compounds the violation.

This case illustrates that disclosure obligations extend beyond the initial activity. When an outside business evolves to include new compensation arrangements, those changes must also be disclosed. The two-month suspension reflects the seriousness of both the undisclosed activity and the false compliance certifications.