Finra Sanctions Upheld - Mitigating and Aggravating Factors Discussed

Howard Braff, Exchange Act Rel. 66467, February 24, 2012

Finra fined Braff $25,000 and suspended from all associations for two years. He was found to have failed to provide written notice to three employers of outside brokerage accounts and falsely claimed in writing to have no outside accounts. The Commission upheld the sanctions.

Braff was no rookie, he had been a rep since 1983. The Commission used Braff's extensive industry experience to justify its finding that his concealment was intentional. In upholding the sanctions the Commission noted that the following are not mitigating factors when assessing the appropriateness of sanctions:

• lack of disciplinary history;
• cooperation with the investigation;
• absence of monetary gain;  
• absence of customer harm; and
• absence of aggravating factors.

Unfortunately, the Commission continues to punish people for defending themselves. Braff claimed that he relied on the advice of an compliance officer at one firm. The Commission found this an aggravating factor characterizing this as an attempt to "shift blame... to others" and a "failure to appreciate ... [his] duty...." It truly is wrong for the Commission to continue to uphold sanctions for purportedly failing to recognize wrongdoing when respondents defend themselves. The Commission can appropriately justify sanctions based on the actual conduct that has occurred. It need not insist on penalizing people for defending themselves.