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Rogue Brokers and Rogue Agents

In its January 13, 2014 edition, InvestmentNews has an Editorial titled “Finra going after rogue brokers.” The editorial opens with the information that FINRA’s annual letter this year indicates that rogue brokers are to be one of the 2014 agency priorities.
 
The column makes the point that “[s]ince Finra has disclosed that it will have rogue brokers in its cross hairs, it behooves broker-dealers to make sure they are doing everything they can on the front end to not hire a problem employee.” The same should be true for insurance organizations. Rogue agents can bring misery to many. InvestmentNews also makes the important point that there is movement back and forth between the securities and insurance industries of problem brokers. The editors state “legislators and government regulators should start looking at ways to make sure the pipeline between the securities and insurance industries is being monitored more closely. In some cases, problem insurance brokers have been able to restart their careers at securities firms and vice versa.”
 
While standards and processes may differ in important ways, it is hard to argue with the general conclusion of the editorial that “InvestmentNews has documented several cases where stockbrokers have been barred from the securities industry by Finra or the Securities and Exchange Commission but have been able to retain their state insurance licenses. This gives them carte blanche to take advantage of investors and consumers in new ways that are just as devious as their past practices.
 
It would be good to know that once individuals have been thrown out of one industry, they cannot simply start again in a related business and hurt more people.” Right. It would be good to know that.