According to FINRA, Nathan Wilks was assessed a deferred fine of $10,000 and suspended from association with any FINRA member in all capacities for nine months for willfully failing to amend his Form U4 to disclose unsatisfied judgments totaling approximately $320,000, and for falsifying a receipt that he submitted to his firm during an investigation into his financial condition.
Although Wilks was aware of a judgment entered in Illinois state court and had filed a motion seeking to vacate it, he answered no to the Form U4 question asking about judgments. Wilks also falsely attested in a firm compliance questionnaire that he did not have any judgments entered against him. Following a firm inquiry, Wilks belatedly disclosed the Illinois judgment on his Form U4. However, Wilks never amended his Form U4 to disclose a judgment entered against him by a Wisconsin circuit court during a hearing where he appeared via telephone. Further, Wilks learned of additional outstanding judgments through correspondence with FINRA but never amended his Form U4 to disclose these judgments.
Form U4 disclosure requirements serve critical investor protection functions. Investors and firms need to know about judgments against registered persons because they may indicate financial instability, legal problems, or other issues relevant to fitness. Willful failures to disclose required information demonstrate lack of candor and unwillingness to be transparent about matters that could concern investors. The fact that Wilks failed to disclose approximately $320,000 in judgments is particularly serious given the magnitude and the suggestion of significant financial problems.
Compounding these failures, Wilks falsified a receipt during the firm's investigation into his financial condition. After the firm learned of the outstanding judgments and commenced an investigation, Wilks stated during a meeting that he was not aware of any other potential judgments, liens, or wage garnishments. However, the firm's email review later flagged a collection notice Wilks had received for $2,328. When asked about this, Wilks claimed he had paid the debt before the meeting. When the firm requested documentation, Wilks submitted a receipt showing the debt was paid, but he had altered the receipt to show an earlier payment date than the actual payment date on the original receipt.
The falsification of the receipt demonstrates consciousness of guilt and willingness to deceive the firm to avoid consequences. This dishonesty, combined with the repeated failures to disclose judgments, paints a picture of someone who lacks the integrity required to work in the securities industry. For investors, this case highlights the importance of checking BrokerCheck for disclosure information including judgments, which may indicate financial problems that could create incentives for misconduct. Financial professionals facing significant financial pressures may be tempted to engage in unsuitable sales practices, unauthorized trading, or even theft to address their own financial needs. The fact that Wilks not only failed to disclose judgments but also falsified documents during an investigation raises serious questions about trustworthiness. Investors should avoid doing business with individuals who have histories of disclosure failures or document falsification.
