The financial industry designates transactions in one of two ways: either a transaction is solicited or it is unsolicited. A solicited trade occurs where a registered representative contacts the client and initiates the buy or sell transaction. Conversely, where a client initiates the trade, the trade confirmation will indicate unsolicited denoting the registered representative did not contact the client to initiate the trade. The difference between a solicited and unsolicited trade is significant because registered representatives and broker-dealers may be held liable for unsuitable solicited trades, whereas they cannot be held liable, generally, for unsolicited trades.
FINRA’s Department of Enforcement investigated Cox and found he mismarked approximately 996 solicited transactions as unsolicited thereby causing Sterne Agee’s books and records to be inaccurate in violation of federal securities laws. According to FINRA, Cox solicited each order by bringing the relevant security or transaction to the attention of the customer, which included leveraged and inverse exchange traded funds. FINRA alleged Cox mismarked the order tickets as solicited instead of unsolicited in order to circumvent Sterne Agee’s policies and procedures.
Based upon the foregoing misconduct, FINRA alleged Wright violated NASD Rule 3110 and FINRA Rule 2010. Specifically, NASD Rule 3110 requires each FINRA member to “make and preserve books, accounts, records, memoranda, and correspondence in conformity with all applicable laws, rules, regulations and statements of policy promulgated thereunder … and as prescribed by SEC Rule 17a-3.” Accordingly, FINRA fined Cox $10,000 and suspended him from the financial industry for three (3) months.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damage investing with Cox through Sterne Agee, you may be eligible to bring a FINRA arbitration claim to recover your investment losses. Please complete our online form or contact one of our attorneys at (800) 627-2179 for a free consultation.