← Broker database 2022-12-06
Fernando Silva Barred for Refusing to Cooperate with FINRA Investigation
According to FINRA, Fernando Silva was barred from association with any FINRA member in all capacities for refusing to provide information and documents requested by FINRA during an investigation.
The investigation originated from FINRA's review of a Uniform Termination Notice for Securities Industry Registration (Form U5) filed by Silva's member firm reporting that the firm discharged Silva due to concerns that he had misappropriated client funds. Silva refused to provide information and documents requested by FINRA in connection with this investigation.
When FINRA initiates an investigation, registered representatives are obligated to cooperate fully, including producing requested documents and providing testimony. This obligation exists regardless of whether the representative is still employed in the securities industry. Refusal to cooperate with a FINRA investigation typically results in a bar from the industry, as it did in this case.
The underlying allegation that prompted the investigation—that Silva misappropriated client funds—is one of the most serious violations in the securities industry. Misappropriation involves taking client funds for personal use without authorization, which is essentially theft. When a firm terminates a representative for such concerns and files a Form U5 disclosure, FINRA has a responsibility to investigate to determine what occurred and whether other customers may have been affected.
Silva's refusal to cooperate with the investigation means that FINRA was unable to fully examine the allegations. This refusal not only resulted in his bar from the industry but also prevented a complete accounting of his conduct. For investors, this case underscores the importance of the cooperative obligation in FINRA investigations. When a representative refuses to cooperate, it often suggests they have something to hide.
Investors should always review their broker's Form U5 and check FINRA's BrokerCheck system for any disclosures of terminations for cause, customer complaints, or regulatory actions. Such disclosures can be important warning signs of problematic conduct.