What You Need to Know
- A growing number of brokers have been sanctioned by FINRA for improperly applying for COVID-19 Economic Injury Disaster Loans.
- The brokers ignored a major requirement for taking the loans: They didn't operate small businesses.
- The former Merrill Lynch and J.P. Morgan brokers in the latest two cases are no longer registered brokers.
Another former Merrill Lynch broker has been barred by the Financial Industry Regulatory Authority after improperly applying for and receiving a COVID-19 Economic Injury Disaster Loan and then declining to cooperate with FINRA’s investigation of his actions in what has become a growing industry trend over the past several months.
Without admitting or denying FINRA’s findings, Manuel Pinazo signed a FINRA letter of acceptance, waiver and consent on Oct. 19, consenting to the bar. FINRA signed the letter on Tuesday.
Meanwhile, ex-J.P. Morgan rep Latonya L. Anderson was suspended from associating with any FINRA member in all capacities for nine months and fined $12,500, also for improperly applying for and receiving a COVID-19 Economic Industry Disaster Loan, according to a FINRA AWC letter signed by the industry self-regulator on Tuesday.
Unlike Pinazo, the former J.P. Morgan rep cooperated with FINRA’s investigation.
Without admitting or denying FINRA’s findings, another ex-Merrill broker, Scott Madison, signed a FINRA letter of acceptance, waiver and consent on Aug. 18, agreeing to be barred from the industry.
Other brokers sanctioned by FINRA in recent months on accusations of improper EIDL filings included Kenric L. Sexton, a former Wells Fargo broker who was fined $2,500 and suspended for one month for allegedly making “negligent misrepresentations” in an application to the Small Business Administration seeking the loan, FINRA said in July.
Based on Sexton’s negligent misrepresentations in his loan application, the SBA granted him a $1,000 advance on a loan but, in July 2020, the SBA denied his loan application, according to FINRA.
The Same Mistake
In each of the FINRA actions, the reps made the same mistake by ignoring one major requirement of the SBA to qualify for the loan: They don’t operate small businesses.
In the case of Anderson, in about June 2020, she submitted an application to the SBA for an Economic Injury Disaster Loan, according to her AWC letter. “Before submitting the application, Anderson did not review the Economic Injury Disaster Loan program requirements to determine her eligibility, nor did she review any instructions concerning the application,” according to FINRA.
Anderson completed and submitted the application using her cellphone and without referring to any documentation, the AWC letter said.