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Regulation and Compliance > Federal Regulation > FINRA

FINRA Fines, Suspends Broker Who Hid Felony Charges

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The Financial Industry Regulatory Authority suspended a broker from associating with any FINRA member in all capacities for six months and fined him $5,000 after he failed to disclose in a timely fashion that he was charged with three felonies and pleaded guilty to one.

Without admitting or denying the regulator’s findings, John Matthew Underation signed a letter of acceptance, waiver and consent on Dec. 16 in which he consented to the imposition of FINRA’s sanctions to settle the alleged rule violations against him.

Alfred B. Jensen, principal counsel for the FINRA Department of Enforcement, signed the letter on Tuesday.

In November 2005, Underation became registered as a general securities representative and served as a rep and broker for five firms, including Morgan Stanley from 2008-2017, according to his report on FINRA’s BrokerCheck report.

Morgan Stanley terminated him over “allegations regarding representative’s actions in signing a co-worker’s name on a personal loan account without authorization,” according to a disclosure on Underation’s report.

In October 2017, Underation became associated with McDonald Partners and registered with FINRA as a rep and broker for that RIA.

On May 3, 2022, McDonald Partners filed a Form U5 Uniform Termination Notice stating the firm discharged Underation saying he was “statutorily disqualified.”

Prior to that, he was charged with three felonies: aggravated vehicular assault, vehicular assault and failure to stop after an accident, according to a July 31, 2020, disclosure on his report.

The charges of aggravated vehicular assault and failure to stop after an accident were dismissed, while the vehicular assault charge was amended to attempted vehicular assault, a felony to which he pleaded guilty on June 7, 2021.

“Underation ultimately amended his Form U4 to disclose the three felony charges and one felony guilty plea on April 4, 2022, approximately ten months after the deadline for disclosing the felony guilty plea and well over a year after the deadline for disclosing the felony charges,” according to the FINRA letter.

As a result, Underation violated FINRA Rules 1122 (governing filing of misleading information as to membership or registration) and 2010 (governing standards of commercial honor and principles of trade).

Morgan Stanley declined to comment on Thursday. McDonald Partners and Underation didn’t immediately respond to requests for comment.

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