Knowing right from wrong is usually pretty easy. And for most advisors, staying on the right side of that line is pretty easy. Take, for example, borrowing money from a client. You know you shouldn’t do it, and yet some people in the industry still do.
There might not be anything wrong with the loan, so long as your firm approves it.
Or you could follow the lead of U.S. broker Edward Allen Mantanona and borrow a total of $90,000 in two separate loans without mentioning it to your boss.
Apparently buying into the maxim “In for a penny, in for a pound”, the broker then lied on his annual compliance questionnaire, saying he had never borrowed money from a client of the firm.
Not content with lying to his own compliance department, he then ignored the regulator’s request for information and decided not to show up for his hearing.
The result is pretty predictable.
FINRA kicked him out of the industry, pointing out that the unapproved loan, compliance mis-statement and non-cooperation were each serious enough to bar him from the business.
The regulator ordered that he repay the client the principal, plus the 9% interest rate he’d agreed to in the promissory note.