The Financial Industry Regulatory Authority announced that 16 current and-ex State Farm VP Management Corp. registered representatives have settled charges of alleged misconduct regarding FINRA’s Continuing Education Requirements for taking tests. FINRA says that the representatives have agreed to fines ranging from $5,000 to $10,000 and suspensions from 30 days up to six months in length. One person agreed to a ban from working as a principal.
FINRA says that 9 of the 16 representatives were supervisors that allowed or directed subordinates to take State Farm’s ‘Firm Element’ proficiency test for them. One supervisor told a subordinate to take the test for other reps. The other six registered representatives that settled were the ones that took the test for others.
The SRO says State Farm did not know about the misconduct and self-reported after it discovered that there were irregularities taking place in one of its regions. State Farm began investigating the incidents. It then expanded its probe nationally and reported its findings to FINRA.
The Firm Element portion of the mandatory two-part test, which is administered by FINRA, other SROs, and the Securities Industry/Regulatory Council on Continuing Education, requires that firms give registered employees who deal with clients, and their supervisors, the proper training that covers the areas of new products, risk disclosure, sales practices, and new regulatory requirements and concerns.
State Farm’s 2005 Firm Element test, according to FINRA, requires each test-taker to log onto an “internal, computer-based system” by inputting their user ID and password. The subordinates that engaged in the alleged misconduct are accused of using their supervisors’ user names and passwords to take the test for them.
By admitting to the charges and settling them, the respondents are not admitting to or denying the allegations.
The investment fraud law firm of Shepherd Smith and Edwards represents investors that have lost money because of the negligence or misconduct of a securities industry member. Contact Shepherd Smith and Edwards today.
Related Web Resources:
FINRA Fines, Suspends 16 State Farm Representatives for Test-Taking Irregularities in the Firm’s Continuing Education Program, Business Wire, March 6, 2008
FINRA and the Securities Industry Continuing Education Program, FINRA
State Farm Companies