State Farm Insurance Companies says it has terminated the registration of 3 of its principals after the Financial Industry Regulatory Authority disciplined 16 of its producers for allegedly cheating on tests for financial advisors.
FINRA, Washington, took the action against the 3 principals plus 13 securities brokers of State Farm, Bloomington, Ill., for misconduct involving FINRA’s continuing education requirements for registered representatives.
Although none of the registered representatives either admitted or denied the charges, they consented to the entry of findings, FINRA says.
State Farm said it had terminated the registration all 3 principals, although 1 had already retired from the company. It also terminated the registration of several others, although those individuals can still sell nonfinancial State Farm products.
FINRA imposed fines on the individuals ranging from $5,000 to $10,000 and ordered license suspensions ranging from 30 days to six months.
Some of those disciplined had allegedly arranged in 2005 to have others take FINRA-required tests for themselves or for others. Others supposedly took the tests in the names of coworkers.
The FINRA-mandated exam, known as a “Firm Element,” tested representatives on their knowledge of the company’s products and service.
The disciplined brokers and advisors were members of State Farm VP Management Corp., a company unit that sells mutual funds and variable products.
FINRA says 9 of those sanctioned were supervisors who, rather than take a proficiency examination, let subordinates take it for them. According to FINRA, one principal directed a subordinate to take the exam for other registered representatives.
Among the other sanctioned reps, 6 took on-line tests for their own bosses.
The spurious test-takers simply entered the user identifications and passwords of those for whom they were taking the test, FINRA alleged.
A spokesman for State Farm said the company initially reported the conduct to FINRA after information it received from one of its employees about alleged testing fraud led to an internal investigation.