Enforcement: Goldman Trader Barred for Misleading Customers

Health Net added the provision in August 2011 after the SEC adopted a rule to prohibit any action to impede someone from communicating with the regulator about possible securities law violations. Health Net removed the SEC-specific language from its severance agreements in June 2013, but kept restrictive language that removed the financial incentive for reporting information until it finally changed the agreements to eliminate all such restrictive language last year.

Health Net has neither admitted nor denied the findings, but consented to the penalty and also agreed to make reasonable efforts to inform former employees who signed the severance agreements from Aug. 12, 2011, to Oct. 22, 2015, that Health Net does not prohibit former employees from seeking and obtaining a whistleblower award from the SEC. In addition, Health Net agreed to certify to the SEC's enforcement division staff that it has complied.

Just recently the SEC also penalized an Atlanta-based building products distributor for using severance agreements that required outgoing employees to waive their rights to monetary recovery should they file a charge or complaint with the SEC or other federal agencies. FINRA Censures, Fines Ameriprise on Short-Term Trading of Closed-End Funds

Ameriprise Financial Services Inc. was censured by FINRA and fined $100,000 for failure to supervise its registered representatives' sales of closed-end funds (CEFs) to their customers.

According to the agency, despite the firm knowing that CEFs purchased at an initial public offering were most suitable for long-term investments, and that the sales charges on IPO purchases made short-term trading of these CEFs generally unsuitable, it had no system or procedures in place to detect and prevent potentially harmful short-term trading of CEFs. As a result, at least one registered representative engaged in a pattern of unsuitable short-term trading of CEFs purchased at the IPO.

In addition, a former registered representative engaged in a pattern of recommending short-term trading of CEFs at the IPO in connection with customer accounts. On two occasions, the registered representative's activity was flagged by the firm's centralized supervision unit, a group of registered principals responsible for reviewing trading and determining discipline. But no demonstrable action was taken either time, indicating that the firm was not adequately supervising this type of transaction.

FINRA also said that when a CSU registered principal again flagged the registered representative's activity, an investigation of the registered representative's CEF recommendations was undertaken, and that ultimately led to the registered representative's termination.

The firm did not use surveillance reports designed to find patterns of short-term trading or switching of CEFs. While CSU registered principals generally reviewed CEF IPO transactions, and could establish filters in their supervisory review tool to detect potentially unsuitable patterns, they weren't required to use those filters. That meant that the firm failed to have a supervisory system and written supervisory procedures that could ensure compliance relating to the suitability of short-term trading of CEFs at the IPO.

The firm neither admitted nor denied the findings, but consented to the sanctions.

— Check out Back-to-School Tax Scams on the Rise: IRS on ThinkAdvisor.