FINRA Lawyer Blog
On September 9, 2020, FINRA issued an AWC resolving an investigation with FA Patrick J. Knox. At first blush, the investigation seemed to resolve a rather straightforward Reg S-P violation. FINRA accused Knox of printing his customer list in anticipation of joining a new broker-dealer and providing the list to his prospective employer. Apparently, the list included customer names, social security numbers and birth dates. Because the customer’s did not authorize the release of this information, FINRA deemed Knox to have violated Reg S-P and slapped his wrist with a 10-day suspension and a fine of $2,500. However, a closer examination of the AWC raises some interesting questions about the viability of certain protections afforded by the Protocol for Broker Recruiting.
The Protocol for Broker Recruiting
The Protocol is an agreement designed to provide a framework for representatives to leave one firm and join another. If an FA abides by the Protocol, she can join a competitor without fear of being sued for having violated a contractual non-solicitation provision. Firms that join the Protocol do so on a voluntary basis and agree that an FA can join a competing firm and bring along a client list containing the following information: client name, address, phone number, email address, and account title of the clients.