Michigan Registered Representative Consents to FINRA Sanctions for Exercising Discretion without Written Authorization or Approval from Customer or Member FirmWednesday, May 13, 2020
The Financial Industry Regulatory Authority (FINRA) Department of Enforcement recently approved a Letter of Acceptance Waiver and Consent against James Parrelly, a registered representative who has been associated with Investment Planners, Inc. in Dearborn, Michigan since March 2015.
FINRA alleges in the AWC that between April 2015 and November 2018, Parrelly executed discretionary transactions on approximately 100 dates in a customer’s securities account with only verbal approval and without obtaining any approval from Investment Planners. Although Parrelly had verbal authorization from the customer to exercise discretion, NASD Conduct Rule 2510(b) requires written authorization from customers and written approval from member firms prior to exercising discretion in client accounts.
Accordingly, James Parrelly violated NASD Conduct Rule 2510(b) and FINRA Rule 2010. By signing the AWC, Parrelly consented to a suspension from any FINRA member firm in all capacities for 15 business days and a $5,000 fine.
Parrelly’s FINRA BrokerCheck report reveals numerous customer disputes throughout his career as a registered representative as well as additional regulatory actions taken against him. In October 2006, Parrelly consented to FINRA sanctions for allegedly making unsuitable recommendations and engaging in short-term trading of Class B shares. Parrelly allegedly recommended that a customer use cash distributions from mutual positions to purchase additional shares of the same fund. This strategy allowed Parrelly to gain new commissionable sales for himself instead of reinvesting the shares with the fund group, which would have allowed the customer to avoid excess commission fees.
Parrelly’s most recent pending customer dispute, filed in April 2019, alleges churning, negligence of duty and unsuitable investments. The damage amount requested is $500,000.
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