Revised FINRA Sanction Guidelines Increase Penalties for Brokers with More Complaints

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FINRA announced it will consider customer-initiated disputes as part of its disciplinary process when sanctioning brokers for misconduct, writing that brokers with a pattern of causing harm may expect to receive greater discipline than those with an otherwise-clean record for the same instance of misconduct.

In issuing its regulatory notice, FINRA explained that arbitration settlements and similar customer-initiated disputes are valuable tools in the fight to deter broker misconduct, explaining that adjudicators will now be able to impose more severe sanctions upon brokers with checkered pasts, such as those with a high number of disclosures and settled disputes on record, or those cockroach brokers who have left behind a trail of unsatisfied customers and arbitration awards.

For instance, FINRA in September 2017 fined and suspended former Centaurus Financial (Newport Beach) broker Tiffany Ann De Ruosi aka Tiffany Ann Rigali for willfully failing to disclose a criminal conviction.

DeRuosi/Rigali (CRD #2256196) has a lengthy disciplinary history, including a California Department of Insurance license revocation for "demonstrated present or potential unfitness" and multiple settled customer disputes totaling over $1 million in damages for charges ranging from unsuitable recommendations to misrepresentation and fraud; September's action was DeRuosi's 33rd BrokerCheck disclosure.

Had FINRA 's new sanctioning guidelines been in place for DeRuosi, adjudicators would have been able to consider at least some of these previous disclosures before deciding on her discipline.

The new sanctioning guidelines specified in FINRA Regulatory Notice 18-17 take effect June 1, 2018, and do not apply to arbitration awards in which the respondent has filed a motion to vacate that has either been granted or which is still pending.

If you have invested with a broker or financial adviser with a history of misconduct and complaints whose illicit business activities have proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.