- Whether the particular felony at issue, examined in light of the circumstances related to the felony and other relevant facts and circumstances, creates an unreasonable risk of harm to the market or investors; and
- The totality of the circumstances in reaching a judgment about X’s future ability to deal with the public in a manner that comports with FINRA’s requirements for high standards of commercial honor and just and equitable principles of trade in the conduct of his business.
Although X’s criminal conviction is serious, the felony conviction occurred in 2003, almost four years ago, and the NAC is not aware of any other misconduct by X. Also, X has been punished for his felony offense by a State 1 court, which ordered him to pay $10,374.18 in restitution and placed him on probation for five years. X paid the restitution, and he received a conditional discharge from probation in September 2006.
Further, although NAC was initially concerned with the fact that X’s felony involved theft from a former employer, it recognized that X did not steal money, but rather stole drugs to support his then addiction.
The record indicates that since his 2003 arrest, however, X has been participating successfully in a program of recovery with Alcoholics and Narcotics Anonymous. X’s recovery sponsor submitted a letter stating that he and X attend meetings together several times each week and actively work to continue X’s sobriety. X has also demonstrated his commitment to his rehabilitation by completing his college degree and by maintaining an office assistant position with an electric company, where he has been responsible for accounts payable and receivable, as well as payroll.
Moreover, as an added precaution, we note that the Firm has specifically provided that X will not have access to cash or securities of customers. The proposed supervisor is well qualified and has worked in the securities industry since 1999 with no disciplinary history.
The Sponsoring Firm has been a member of FINRA since 1992, with no formal disciplinary history. The Firm has agreed to the following comprehensive supervisory plan to ensure that it will be able to maintain heightened supervision for X (Heightened Supervision not accorded to other RRs af Firm is noted in RED):
- The Sponsoring Firm will amend its written supervisory procedures to state that the Proposed Supervisor is the primary supervisor responsible for X;
- X will not maintain discretionary accounts and will not have access to cash or securities of customers;
- X will be employed as a general securities representative and will not be permitted to act in a supervisory capacity;
- The Proposed Supervisor will supervise X on-site at the Firm’s home office in State 1;
- The Proposed Supervisor will review and pre-approve each securities account prior to X’s opening of the account. The Proposed Supervisor will document his review by dating and signing the account paperwork and maintaining it at the Firm’s home office;
- The Proposed Supervisor will review and approve X’s orders after execution, or as soon as practicable, on a “T + 1” basis. The Proposed Supervisor will also review the trade reports on a T + 1 basis and document his review by dating and initialing them and maintaining them at the Firm’s home office;
- The Proposed Supervisor will review X’s incoming written correspondence (including e-mail communications) upon its arrival and will review outgoing correspondence before it is sent;
- For the purposes of client communication, X will only be allowed to maintain an e-mail account that is held at the Firm, with all e-mails being filtered through the Firm’s e-mail system. If X receives a business-related e-mail message in another e-mail account outside the Firm, he will immediately deliver that message to the Firm’s e-mail account. X will also inform the Firm of all outside e-mail accounts that he maintains. The Proposed Supervisor will conduct a weekly review of all email messages that X sends or receives and will print the e-mail messages and keep them segregated for ease of review during any statutory disqualification audit;
- All complaints pertaining to X, whether oral or written, will be immediately referred to the Proposed Supervisor for review, and then to the Compliance Department of the Firm. The Proposed Supervisor will prepare a memorandum to the file as to what measures he took to investigate the merits of the complaint (e.g., contact with the customer) and the resolution of the matter. The Proposed Supervisor will keep all documents pertaining to these complaints segregated for ease of review;
- If the Proposed Supervisor is out of the office, the Proposed Supervisor 2, president of the Firm, will act as X’s interim supervisor;
- For the duration of X’s statutory disqualification, the Firm must obtain prior approval from Member Regulation if it wishes to change X’s responsible supervisor from the Proposed Supervisor to another person, or if it wishes to make a material change in X’s job responsibilities; and
- The Proposed Supervisor must certify quarterly (March 31st, June 30th, September 30th, and December 31st) to the Compliance Department of the Firm that he and X are in compliance with all of the above conditions of heightened supervision.