← Broker database 2023-09-27
Alan Donenfeld Barred for Failing to Testify About Outside Business Activity
According to FINRA, Alan Paul Donenfeld was barred from association with any FINRA member in all capacities for refusing to appear for on-the-record testimony requested by FINRA.
FINRA was investigating Donenfeld's outside business activity (OBA). FINRA rules require registered representatives to provide written notice to their firms before engaging in any outside business activity. This requirement allows firms to evaluate whether the outside activity might interfere with the representative's duties to the firm or its customers, create conflicts of interest, or otherwise be inappropriate.
Outside business activities can range from operating a separate business to serving on a board of directors to working a part-time job. The key is that registered representatives must disclose these activities to their firms so that proper supervision can be maintained. Failure to disclose outside business activities can lead to situations where representatives engage in activities that conflict with their duties to customers or involve customers in ventures that the firm would not have approved.
Donenfeld's refusal to provide testimony about his outside business activity prevented FINRA from understanding the nature of the activity, whether it was properly disclosed, whether it involved securities transactions, and whether customers were harmed. By refusing to testify, Donenfeld obstructed FINRA's investigation into these important questions.
The permanent bar demonstrates that cooperation with FINRA investigations is not optional. Registered persons must appear for testimony when requested, and their refusal to do so has severe consequences. The bar protects future investors from someone who has demonstrated unwillingness to be accountable to regulators for his activities.
Investors should understand that their brokers may have outside business activities, but those activities should be properly disclosed and supervised by the firm. If a broker involves you in an outside business venture, ask whether the firm is aware of and has approved the activity. Check your broker's Form U4 through BrokerCheck to see disclosed outside business activities.