More On Legal & Compliancefrom The Advisor's Professional Library
- RIAs and Customer Identification Just as RIAs owe a duty to diligently protect their clients privacy and guard against theft, firms also play a vital role in customer identification. Although RIAs are not subject to an anti-money laundering rule, securities regulators expect advisors to address these issues in their policies and procedures.
- Whistleblowers A whistleblower is any individual providing the SEC with original information related to a possible violation of federal securities law. The Dodd-Frank Act established a whistleblower program that enables the SEC to reward individuals who voluntarily provide such information.
When Jon Corzine returned to the securities business to run MF Global, he did so without requalifying or registering, as required by FINRA. Apparently FINRA waived the requirements for the former New Jersey governor, who resigned from the now-bankrupt MF Global last week.
According to a story in Forbes, a search on FINRA’s BrokerCheck failed to turn up the former head of Goldman Sachs, who returned to the financial world after he lost his bid for re-elecition as New Jersey governor in 2009. Although MF Global was listed as a FINRA member firm, the Forbes story said Corzine was not registered, as is required for principals according to FINRA’s own website, when he took the helm of MF Global.
The SRO may have granted Corzine a waiver despite the fact that he had been out of the business for approximately 11 years. The ex-governor sat only for a Series 32 exam in 2010, said Singer, despite the fact that his Series 7 and Series 24 credentials had long since expired. Corzine last sat for the former in 1975 and the latter in 1982.
FINRA is generally insistent on the need for registration—the Forbes story summarized the organization’s requirements as, “Anyone actively involved in the member’s investment banking or securities business must be registered”—and recertification, according to Forbes, which referred to other instances in which individuals without Corzine’s standing were unsuccessful in obtaining waivers.
The story, written by Bill Singer, asked whether someone at FINRA did Corzine a favor by granting a double waiver, and concluded, “You tell me if my thesis about one FINRA for the small fry and one FINRA for the big fish isn’t true.”