← Broker database 2024-08-05
Marat Likhtenstein Barred by FINRA for Refusing to Cooperate with Investigation
According to FINRA, Marat Likhtenstein (CRD #2470480), a former registered representative based in Brooklyn, New York, was barred from association with any FINRA member firm in all capacities. The bar was issued on August 5, 2024, through an Acceptance, Waiver, and Consent (AWC) agreement under FINRA Case #2024082598101.
Likhtenstein was found in violation of FINRA rules after he refused to provide documents and information and refused to appear for on-the-record testimony requested by FINRA. The regulator had initiated an investigation based on a Form U5 filing submitted by Likhtenstein's former member firm. The Form U5, formally known as the Uniform Termination Notice for Securities Industry Registration, is a critical regulatory document that firms must file when a broker leaves, disclosing the circumstances of the departure.
In this case, the Form U5 disclosed that Likhtenstein was discharged by his firm because he failed to disclose personal loan transactions with a client. Personal financial transactions between brokers and their clients are a serious regulatory concern in the securities industry. FINRA Rule 3240 specifically governs borrowing and lending arrangements between registered representatives and their customers. The rule requires that such arrangements be permissible under the firm's written procedures, that the firm provide prior written approval, and that the arrangement meet one of several specific conditions. Failing to disclose such transactions to the firm prevents proper supervisory oversight and can expose customers to significant financial risk.
Loan arrangements between brokers and clients can create conflicts of interest that compromise the broker's ability to provide objective financial advice. They may also indicate a deeper pattern of boundary violations or financial exploitation. When a broker borrows money from a client, the client may feel pressure to maintain the business relationship or may be reluctant to complain about unsuitable investment recommendations.
When FINRA sought to investigate these allegations by requesting documents, information, and on-the-record testimony, Likhtenstein refused to cooperate. Under FINRA Rule 8210, all associated persons are required to comply with FINRA's requests for information and testimony during investigations. Refusal to cooperate is itself a standalone violation that almost invariably results in a bar from the industry.
Without admitting or denying the findings, Likhtenstein consented to the sanction and the entry of findings against him. As a result, he is permanently prohibited from working with any FINRA-registered broker-dealer.
Investors should be aware that personal financial dealings with their broker, such as loans, are generally prohibited or heavily restricted. If your broker asks to borrow money or engages in any personal financial transaction with you, this is a significant red flag. You can verify the status and disciplinary history of any broker through FINRA's BrokerCheck system.