FINRA Fines Broker-Dealer $100K for Letting Suspended Rep Keep Working

Independent Financial Group LLC, or IFG, a large broker-dealer based in San Diego, has been fined $100,000 by the Financial Industry Regulatory Authority for allowing a registered representative to continue working while suspended.

IFG operates under an independent contractor model with approximately 380 branch offices and 650 registered representatives.

Between April and November 2022, the IFG-registered representative was suspended by FINRA from associating with any member firm in all capacities. According to FINRA rules, such a suspension constitutes a statutory disqualification, prohibiting the individual from working for any member firm, even in a clerical role.

Despite the disqualification, the firm allowed the representative to continue associating with IFG during the 2022 period by entering securities orders through its clearing firm’s trading desk and electronic system.

FINRA determined that this conduct violated several rules, specifically:

• Article III, Section 3(b) of FINRA’s Bylaws: Prohibits a firm from continuing to associate with a person subject to a statutory disqualification;
• FINRA Rule 8311: Prohibits a member from allowing a sanctioned or disqualified person to be associated with it in any capacity; and
• FINRA Rule 2010: Requires members to observe high standards of commercial honor and just and equitable principles of trade.

For these violations, IFG consented to a censure and the $100,000 fine without admitting or denying the findings. The firm has agreed to pay the penalty and waived any right to claim an inability to pay the monetary sanction.

Founded in 2003 to “put the adviser first and create a truly independent business model,” IFG is led by Scott Heising, founder and chief executive officer. It most recently reported $33 billion in assets under advisement.

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