A recent AWC demonstrates the old Watergate adage that the cover-up is always worse than the crime. In this AWC, FINRA suspended a registered representative for ten (10) months and fined her $15,000.

Among other things, the representative entered inaccurately identified her assistant as the person placing trade orders where the assistant was the only person between them licensed in the state. This person then went to another broker-dealer where she entered 200 discretionary trades without prior written client authorization or broker-dealer approval.robber.jpg

As if these securities violations were not bad enough, what came next really did this person in with FINRA. She lied to the first firm that her assistant placed the trade order and then went to her assistant and asked the assistant to confirm the lie. With the second broker, this person misrepresented on the branch office questionnaires that she had never entered any discretionary trades when she had actually entered 200.

So what are the takeaways? It is likely that the securities violations would have resulted in this person being terminated from both firms. However, it is an open issue if she would have been suspended for as long as she was and fine as much as she was but for lying and asking another person to do so on her behalf.

Although it may be difficult to accept, the best course of action when you mess up is to deal with what you did as opposed to lying about it and making the situation worse. As a number of people in the Nixon Administration learned, the cover-up is always worse than the crime.

A good test to guide your conduct is to ask yourself whether you would be embarrassed to hear about the situation on the news. If so, you are going down the wrong path.

* photo from freedigitalphotos.net