Rick Esparza of Rancho Murieta, California, a registered representative with Princor Financial Services Corporation, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any and all capacities after consenting to findings that he had failed to comply with a FINRA investigation into allegations of Esparza’s participation in unauthorized loans. Letter of Acceptance, Waiver and Consent, No. 20150469198-01 (Dec. 14, 2015).
According to the AWC, on October 23, 2015, during FINRA’s investigation into allegations of Esparza’s acceptance of a $67,500 loan from two firm customers, FINRA had requested, pursuant to Rule 8210, that Esparza provide information and documentation by October 30, 2015.
The AWC indicated that Esparza communicated with FINRA on October 28, 2015, where Esparza had acknowledged that he had received FINRA’s requests pursuant to Rule 8210 but that he would not be providing any requested information and documentation at any point. FINRA found that by refusing to respond to FINRA’s request for information and documentation, Esparza had violated FINRA Rules 8210 and 2010, leading to his permanent bar.
FINRA registered representatives like Esparza who do not cooperate with FINRA’s investigations often face a permanent bar from practicing in the securities industry as such lack of cooperation violates FINRA’s Rule 8210 – requiring that no member or person shall fail to provide information or testimony or permit an inspection and copying of books, records, or accounts pursuant to the rule. FINRA typically accompanies a Rule 8210 violation with a Rule 2010 violation when individuals, according to FINRA, do not appear to observe high standards for commercial honor and just and just and equitable principles of trade.
According to FINRA Rules 2370 and 3240, representatives such as Esparza are prohibited from borrowing money from customers unless the firm has written procedures that allow for the lending, where the relationship meets certain criteria, and where the representative follows requirements for notice and pre-approval of the lending arrangement.
Public disclosure records reveal that on August 17, 2015, Esparza had settled a customer dispute for $75,000 after clients alleged Esparza admitted to taking a personal loan from his client. The loan was financed with funds received from multiple partial withdrawals from a variable annuity. The client reportedly complained when Esparza was unable to make timely payments. On August 21, 2015, Princor Financial Services Corporation terminated Esparza in connection with the aforementioned conduct.
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