Enforcement Actions
Financial Industry Regulatory Authority (FINRA)
CASES OF NOTE
2009
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.
Stephanie Murch Haggerty
AWC/2007011496202

Haggerty 

  • did not have the required Series 86 or 87 (Research Analyst Qualification Exam) licenses required for research analysts when she was the principal author of or contributor to the Stock Pick sections of her member firm’s newsletter;
  • failed to disclose her ownership of securities that she profiled as Stock Picks because she did not treat the section as a research report;
  • purchased a security for her own account within 30 days prior to the security being featured as a Stock Pick, and before her firm’s legal or compliance officers pre-approved the Stock Pick section of the newsletter;
  • failed to disclose valuation methods used to determine the price target in any Stock Pick section and the risks to achieving the price targets in her stock picks; and
  • failed to certify that the views in the sections of the firm’s newsletter that she authored or contributed to were her own. 
Stephanie Murch Haggerty: Fined $10,000; Suspended 30 days
Bill Singer's Comment
Assuming that we accept FINRA's explanation of the facts, it seems that Haggerty authored a "Stock Pick" column in a newsletter sent out by her firm. That's not a minor fact. How come someone at her firm didn't hold up publication of the newsletter when it realized that Haggerty was publishing material without anyone having pre-approved it? Further, why did Haggerty's Firm permit her to author research analyses (and why when she did not hold the Series 86/87? How could her firm not have had prior notice of her authored materials when the firm published the column in its own newsletter? This would be like my law firm asking a non-lawyer employee to draft a legal article under his/her name to be included on the firm's website and sent out in its newsletter. Then, when it turns out that the article has some errors and failed to disclose ethical conflicts, my law firm would argue that it didn't know the non-lawyer wasn't a lawyer, that the non-lawyer should not authored the article, and that the non-lawyer failed to disclose conflicts. Yeah, like that's going to work.

Something here is just not making sense -- of course, that something could be FINRA, which wouldn't be that much of a shock to me.

Also, see this apparent companion case: Weitz
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