Richard Marvin Muhlberg of Cherry Hill, New Jersey, a stockbroker with Sigma Financial Corporation, was suspended from association with any Financial Industry Regulatory Authority (FINRA) member in any and all capacities for a period of three months and fined $10,000 after consenting to findings that he had borrowed money in violation of his firm’s procedures and provided false information to the firm on three compliance questionnaires. Letter of Acceptance, Waiver and Consent, No. 2015045751201 (Nov. 20, 2015).
According to the AWC, from April 2009 through April 2011, Muhlberg had borrowed $11,500 from one of his firm’s customers. During such period, his firm had explicitly prohibited representatives from engaging in such a lending agreement. Muhlberg reportedly failed to inform his firm of the loan. FINRA found that as a result, Muhlberg violated NASD Conduct Rule 2370 and Rule 3240.
The AWC additionally stated that in January 2010, January 2011, and December 2011, Muhlberg had falsely represented to Sigma Financial in compliance questionnaires that he had not borrowed money from a customer of the firm. FINRA found that Muhlberg’s conduct in this regard was violative of Rule 2010.
FINRA’s Rule 3240 states that a stockbroker cannot borrow funds from his or her customer except in certain circumstances, and only then with the consent of the stockbroker’s FINRA regulated broker-dealer employer. Violating that rule, according to FINRA, is a violation of Rule 2010, which requires stockbrokers to observe high standards of commercial honor and just and equitable principles of trade.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Public disclosure records reveal that Muhlberg has been subject to three disclosure incidents. On June 5, 2015, Muhlberg was terminated by Sigma Financial Corporation for borrowing funds from a client. On December 16, 2015, New Jersey’s Bureau of Securities suspended Muhlberg for six months and assessed civil and administrative penalties/fines of $3,500.00 after Muhlberg consented to findings that he engaged in dishonest or unethical business practices in the securities business by borrowing money from his client.
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