According to FINRA, Robert Joseph DeHayes was fined $10,000 and suspended for six months for opening and maintaining an outside brokerage account without notifying or receiving prior written consent from his member firm and without notifying the firm at which the account was maintained of his association.

DeHayes's firm reduced the level of options trading permitted in the accounts he maintained for himself and his wife at the firm. On the same day, DeHayes opened an outside brokerage account at another firm in his wife's maiden name. Over the course of the next nine years, DeHayes traded securities in the outside account, including the types of options trading that his firm no longer permitted in his accounts and additional options investing that his firm prohibited.

This case reveals a deliberate scheme to evade firm supervision. When DeHayes's firm restricted his options trading authority due to concerns about the risk or appropriateness of his trading, he immediately opened a secret account at another firm to continue the prohibited trading. By using his wife's maiden name and failing to disclose his association with his firm, DeHayes ensured that neither his own firm nor the other firm would know about the account or supervise his trading.

The fact that this conduct continued for nine years demonstrates sustained and intentional evasion of supervisory controls. DeHayes's firm had determined that certain options strategies were too risky or otherwise inappropriate for him, yet he deliberately circumvented those restrictions by maintaining a secret account.

This case illustrates why firms restrict certain types of trading and why registered representatives must disclose all outside accounts. When brokers evade supervision by maintaining secret accounts, they can engage in risky or inappropriate trading without oversight. Investors should understand that if their broker is willing to evade their own firm's supervision, they may also be willing to violate rules meant to protect customers.