← Broker database 2024-07-24
Craig Sherman Thistlethwaite Suspended for Discretionary Trading and Communication Violations
According to FINRA, Craig Sherman Thistlethwaite was fined $10,000 and suspended from association with any FINRA member in all capacities for 60 days on July 24, 2024, for exercising discretionary authority to effect trades in two related customers' accounts without obtaining written authorization from the customers and without his member firm having accepted the accounts as discretionary.
Discretionary authority allows a registered representative to make investment decisions in a customer's account without obtaining the customer's prior approval for each transaction. Due to the potential for abuse, FINRA rules require that customers provide written authorization for discretionary trading and that the firm accept the account as discretionary before any discretionary trades are made. This ensures proper documentation and heightened supervision of discretionary accounts.
Additionally, Thistlethwaite caused the firm to maintain incomplete books and records by exchanging business-related communications, including communications concerning securities transactions, with a firm customer via text message from his personal cellular device without the firm's approval. Because these communications were sent via an unapproved communications platform, they were not captured and preserved by the firm as required by regulatory record-keeping requirements.
Firms are required to retain business-related communications to allow for regulatory oversight and supervision. When representatives use unapproved communication methods, it prevents firms from supervising those communications and creates gaps in the firm's records. This can hide misconduct and prevent proper oversight.
The 60-day suspension, in effect from August 5, 2024, through October 3, 2024, reflects the importance of obtaining proper authorization for discretionary trading and maintaining complete records of business communications. Investors should understand the difference between discretionary and non-discretionary accounts and should ensure that any discretionary authority is properly documented and that they understand the implications of granting such authority.