According to FINRA, Justin Howard Parkhurst was fined $5,000 and suspended from association with any FINRA member in all capacities for one month for causing his member firm to maintain inaccurate books and records. Parkhurst had entered into an agreement to share commissions with another representative and a retired representative using a joint representative code. However, he changed the representative code on trades from the joint code to a different code he shared only with the other active representative.
Parkhurst's system prepopulated trades with the correct joint representative code, but he manually changed the codes, causing trade confirmations to show inaccurate information. He mistakenly believed his agreement with the retired representative did not apply to new assets added to the accounts. As a result, Parkhurst received higher commissions than he was entitled to under the agreement.
Accurate books and records are fundamental to securities regulation. When representatives falsify trade records, it undermines the integrity of firm records and can lead to improper commission payments. Although Parkhurst's actions were based on a mistaken belief rather than intentional theft, he had a responsibility to verify his understanding before changing the codes.
After the violation was discovered, the firm paid restitution to the retired representative, and Parkhurst reimbursed the firm $70,617—the approximate amount of additional commissions he received. The one-month suspension and fine emphasize that representatives must maintain accurate records and cannot unilaterally change commission arrangements without proper authorization and verification.