By Robert R. Boeche II, Esq., Partner of Shustak Reynolds & Partners, P.C. posted on Wednesday, September 30, 2020.

Robert R. Boeche II

Partner

Location: San Diego, California
Phone: (619) 696-9500 (Ext. 122)
Direct: (619) 546-5502
Email: [email protected]

The SEC and other regulatory bodies have made protecting the non-public personal information of clients a top priority.  This can be seen in the multitude of rules, enforcement actions and books, and records requirements imposed upon registrants in the past few years.

While those in the financial services industry are well aware of this fact, confidentiality of current clients is often overlooked when transitioning into a new job.  Many brokers and financial advisors do not realize that the slightest miscue about privacy protection can have major consequences.  However, there should be a huge emphasis in every professional setting to protect confidentiality of clients at all costs.

On September 9, 2020, FINRA handed down a disciplinary fine and suspension to financial advisor Patrick J. Knox for violating SEC regulation S-P and FINRA Rule 2010.  These regulations prohibit financial advisors from disclosing non-public personal information about clients unless proper notice is given to the client and the client is given an opportunity to opt out of their personal information from being disclosed.

Per FINRA allegations, while he was still registered through an association with Lincoln Investment, and in anticipation of moving to a new employer, Mr. Knox printed a client list that contained “nonpublic personal information” about his clients including their names, social security numbers and dates of birth.  He then proceeded to provide this list to his new employer without obtaining client consent. FINRA found these actions to be “improper” and in violation of Regulation S-P and FINRA 2010.

Without admitting or denying the allegations, Mr. Knox entered into an AWC, whereby FINRA suspended Knox for 10 business days and slapped him with a $2,500 fine.  Additionally, such sanctions must be disclosed as part of the registrant’s public record.   

Confidentiality and privacy protection need to be a top priority in every financial institution in order to protect clients’ interests and personal information.  Those financial professionals seeking to transition to a new employer must remain mindful of such privacy rules that govern their practices and the industry as a whole.

Shustak Reynolds & Partners, P.C. focuses its practice on securities and financial services law and complex business disputes. 
We represent many broker-dealers, registered representatives, investment advisors, investors and businesses. 
Partner Robert Boeche can be reached in the firm’s San Diego office at (619) 696-9500. 

Share This Article