When I opened my newsfeed to discover that Thrivent Investment Management Inc. had been fined $325,000 and sanctioned by securities regulators, the seriousness of the allegation immediately struck me. It wasn’t a minor paperwork error or a missed deadline – it involved the forgery of customer documents and substantial oversight faults. For investors, especially those connected with Thrivent, it’d be natural to feel a sense of unease, if not outright panic.
Understanding the Case
The Financial Industry Regulatory Authority (FINRA) reported the following:
- From July 2017, at least 15 Thrivent representatives allegedly forged more than 260 customer documents by electronically signing customer names without permission.
- Thrivent, according to FINRA, lacked adequate supervisory procedures to detect such issues.
- The violations allegedly included serious offences against key FINRA rules, such as Rule 3110 and Rule 2010, and Section 17(a) of the Securities Exchange Act.
The Advisor at the Heart of the Matter
In the middle of this turmoil is a stockbroker licensed with Thrivent Investment Management. The broker, located in Hattive Mississippi, was fined $5,000 and issued a six-month suspension by FINRA for supposedly putting false customer signatures on account documents. The violations spanned from September 2020 to November 2021, covering around 102 digital forms tied to some 57 customers.
While it appears that one customer allowed this broker to sign a form on their behalf, the crux of the problem lies with the remaining 101 forms, signed without customer consent. This action flagrantly disregards Thrivent’s rules. The broker’s association with Thrivent was from November 15, 2019, until January 12, 2022, and they were discharged on December 20, 2021, due to allegations of acquiring bogus customer signatures for account documents.
According to FINRA’s database, the broker’s record didn’t show previous customer complaints or regulatory penalties.
Deciphering the Legal Jargon – FINRA Rules Simplified
FINRA Rule 3110 – It emphasises the need for firms to establish and maintain a supervisory system designed to fit within securities laws and regulations.
FINRA Rule 2010 – It highlights maintaining high standards of commercial honor and following equitable principles of trade.
Section 17(a) of the Securities Exchange Act – Requires accurate record-keeping to prevent any discrepancies and maintain transparency.
These rules are fundamental to the functioning of the financial markets, ensuring transparency, fairness, and integrity. When broken, they reflect a disregard for the investors’ interests and the overall financial system’s health.
Consequences and Lessons to Learn
In addition to the hefty fine, Thrivent has been instructed to rectify the issues and implement a compliant supervisory system within 120 days. The broker at the center was suspended for six months and fined $5000. But what can investors take away from this episode? First, a nuanced understanding of the importance of trust in financial dealings.
As Henry Kravis put it, “If you don’t have integrity, you have nothing. You can’t buy it…“. This case is a stark reminder of that fact. Trust and integrity are cornerstones of financial relationships, and when those are violated, the effects can ripple out further than one might think.
Second, an increased awareness of their rights and the regulations in place to protect them. FINRA and other regulatory bodies exist for investor protection and to ensure the fair practice of financial dealings. Reading this kind of news may be unsettling, but it also serves as a wake-up call for investors to do their homework and stay informed.
Lastly, it’s important to choose your financial advisor wisely. According to FINRA, about 7% of all financial advisors have had a complaint or misconduct allegation filed against them. Some red flags that might signal an unsuitable advisor include a questionable regulatory history, unclear fee structure, or a lack of fiduciary duty.
In conclusion, while it’s natural to be dismayed by such news, it’s important for investors to use these instances as learning opportunities. Your financial future relies on the decisions you make today, so make them wisely. Financial regulations, no matter how complex they may seem, exist for your benefit. So, stay informed, and don’t be afraid to ask your financial advisor the hard questions. After all, it’s your right to know.
