According to FINRA, Stephen Spencer Gladstone was barred from association with any FINRA member in all capacities for refusing to provide complete on-the-record testimony.

FINRA was investigating Gladstone's potential undisclosed private securities transactions. Gladstone appeared for testimony, but before the testimony was complete, he informed FINRA that he would refuse to answer any further questions and that he had no intention of ever providing further testimony. This refusal to complete testimony prevented FINRA from fully investigating the potential violations.

Private securities transactions, sometimes called selling away, occur when a registered representative engages in securities transactions outside the regular course of their employment and without their firm's knowledge or approval. These transactions are particularly dangerous for investors because they occur outside the firm's supervision and may not be covered by SIPC insurance or the firm's errors and omissions insurance.

When individuals refuse to cooperate with regulatory investigations, it prevents regulators from determining the full scope of potential misconduct and protecting other investors. The refusal to testify is itself a serious violation because it undermines the regulatory system that depends on cooperation from registered individuals.

Investors should be aware that registered representatives must disclose any private securities transactions to their firms and obtain approval before participating in them. If a broker suggests an investment opportunity outside of their firm, this should raise immediate concerns. Investors should verify that any investment is held at the broker's firm and properly documented. Checking a broker's BrokerCheck record can reveal whether they have been disciplined for private securities transactions or failure to cooperate with investigations. A pattern of refusing to provide information to regulators is a major red flag indicating potential misconduct and lack of accountability.