FINRA’s Department of Enforcement investigated Tagge and alleged he borrowed funds from one of his customers who was a personal friend. FINRA alleged the customer loaned Tagge a total of $125,000 on two separate occasions in 2009. At the time, Cetera Advisors prohibited its representatives from borrowing from customers. As a result, in order to circumvent Cetera Advisor’s rules, Tagge arranged for his stepson and his wife to sign promissory notes reflecting the loans. According to FINRA, Tagge repaid almost all of the personal loans upon a demand for repayment.
FINRA alleged Tagge violated several FINRA rules and regulations, including NASD Rule 2370 and FINRA Rules 3240 and 2010. FINRA Rule 3240 prohibits registered persons from borrowing money from or lending money to any customer certain conditions and/or exceptions are satisfied. A violation of FINRA Rule 3240 also constitutes a violation of FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principals of trade.
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