NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.

Derrick Ray Shields
AWC/2008015144801

Shields assisted a relative, an unregistered person at the time, with the sale of a fixed and variable annuity. Shields signed and submitted the customer’s annuity application to his member firm and the annuity company after discussing the matter with firm principals; Shields also signed the firm’s new account application as the customer’s introducing agent, thereby facilitating his relative’s violation of registration rules.

Shields certified on the annuity application that he had explained the contract to the customer even though he knew he had not done so. Shields’ relative became registered with the same firm and the day after he became registered, the annuity transaction settled. Shields later received a commission payment for the annuity sale from his firm for approximately $50,500, he shared the payment with his relative.Shields did not disclose to the firm that he shared the commission payment, and from the time his relative became registered with the firm until the termination of Shields’ association with the firm, it was his relative, not Shields, who was the registered representative responsible for advising the customer on the annuity and for servicing the customer’s account in which the annuity was held at the firm. In addition, Shields failed to take any steps to correctly disclose on the firm’s books and records that his relative was the responsible representative, rendering the firm’s records inaccurate.

Derrick Ray Shields: Fined $10,000; Suspended 3 months

Tags: Annuity  Unregistered Person