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Experience Is No Excuse

Failure to disclose OBAs sinks broker after 50 years

Age is no bar to finding yourself in the regulatory crosshairs. Target du jour is John Halsey Buck, III, who entered the securities industry in January 1965 – pre-cellphone, pre-computer. Previously associated with a number of Financial Industry Regulatory Authority (FINRA) regulated broker-dealers, Buck’s most recent gig (May 2010) was with Morgan Stanley as a registered general securities representative.

At the end of February 2018, Morgan Stanley filed a Form U5 stating that Buck had been discharged on January 29,2018, due to “concerns about the timing and completeness of disclosures to the firm, including disclosures regarding involvement in private investments outside the firm.”

Failure to report outside business activities

Where did FINRA come in? In a follow-up to the Morgan Stanley filing. According to the Authority, the issue is Buck’s September 2018 violation of Rules 8210 and 2010, by failing to provide documents and information requested in connection with an investigation concerning his potential involvement in specific unapproved private securities transactions.

In August 2018, FINRA staff sent Buck a letter – the “Rule 8210 Letter” – requesting he provide specific documents and information by September 14, 2018. The letter noted that failure to produce the requested materials could subject him to a disciplinary action and the imposition of sanctions, including a bar from the securities industry. Buck responded through counsel that he would not provide the requested materials, nor would he cooperate in the future.

FINRA was not pleased and barred him from association with any FINRA member in any capacity. Not even as a file clerk. Worth noting, Buck had no other relevant disciplinary history.

Why would a broker NOT comply?

Perhaps there were other issues to uncover and accepting a FINRA letter of acceptance, waiver and consent would keep them under wraps? Or maybe after 50 years, Buck was just ready to retire.

Nonetheless, tracking outside business activities is the responsibility of FINRA-regulated broker-dealers. That’s where Patrina comes in. We’ve built our business based on helping organizations stay on the “straight and narrow” efficiently and cost-effectively. So, let’s talk. Call 212-233-1155 to ask about Patrina’s cost-effective and comprehensive, 8-module compliance solution, and compliant data capture, file storage, records archiving, and designated third-party services specifically designed for the financial services community. Be smart. Be covered.