ADV issue

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Jan 8, 2012 11:14 pm

Any feedback is on my below issue is appreciated.

In compliance with the new regulatory requirement I recently completed the ADV disclousure form for my regional firm.  After reviewing and vetting my submitted form my firm notified me that an answer I entered regarding my education was not able to be verified.  Simply put, I indicated that I had a Bachelors in General Studies as I had attained over 120 credit hours thoughout the course of my studies as a result of changing majors.  Admittedly I now realize this was naive on my part as I never officially received a diploma, though I certainly wasn't attempting to commit fraud.

I've been an good advisor for a decade, doing right by my clients  never once receiveing any sort of client complaint or any negative feedback from my firm.  My business has grown fairly significantly every year etc.  This being said, I have been told that our compliance department wants to let me go because of this issue, against the wishes of my immediate director and his superior.  I really enjoy working at this firm and certainly don't want to leave, especially under these circumstances.

As the ADV's have yet to even be sent to clients it seems to me that this issue is one that is easily rectifiable by ammending the ADV?  I can appreciate my firms sensitivity to not wanting tarnishing its fairly pristine reputation and how they may feel it somewhat compelled to question my credibility.   Since this issue arose I have been completely honest and sincerely contrite.

So this being said, how do you find my firms reaction to this scenario typical or atypical given the context of what I've done and also what I have not done during my tenure as an adivsor?

Additionally if I am asked to leave do you have any suggestions on how to make the best of a bad situation while staying in the business?  As if I had proactively sought out another firm at any point prior I know I could have receieved between 100 to 150% of my trailing twelve up front, whereas if I'm let go I don't  see myself having much if any leverage for making a transition.

I hope this doesn't come to pass, but I would appreciate any feedback on how make the best of this potentially negative situation as admittedly I'm kind of just in shock since this situation arose.

Thanks!

Jan 9, 2012 3:39 pm

You lied to all of your clients and firm about having a degree.  I'd say that is fraud.


With that in mind... start preparing your exit strategy.  Quickly I'd say. 

Apr 6, 2012 6:21 pm

Hi ibanez21,

I'm sorry to hear about your situation.  I've spent many years in compliance and I've seen just about everything (well, maybe not everything).  Given that this post is a few months old, you may already know the outcome.  I have seen and worked with advisors that have misrepresented many things, education included.  While it does question your creditibility with your firm and I can see them letting you go, I've also seen firms keep advisors for much worse.  It depends on many factors.  First, it depends on the overall compliance culture of your firm, and you stated that your firm has a "fairly pristine reputation".  Some firms are obviously more strict than others. Additionally, it will typically depend on your production and how much business you bring to the firm.  You state that letting you go is against the wishes of your immediate director and his superviser.  There is generally a conflict between compliance and the business line, because although compliance's job is to keep the firm "clean", the firm is in business to make money from producers like yourself.  So, this is what usually happens behind closed doors....the CCO will make a recommendation to senior management to terminate someone because of whatever (in your case, misrepresenting your education), and the CCO will make a case on what potential risk factors are present because of the action (for example, if this person is misrepresenting their education, what else could they be misrepresenting, etc.).  Then, Sr. Mgt will make a decision whether they are wiling to accept the risk of potential regulatory violations for that person's production.  It comes down to the firm making a business decision.

I've seen large producers get away with so many things.  I've also seen small producers let go for the most minor things because the firm is simply not willing to take on the risk.  

I hope things work out well for you.

Regards,

Tiffany Chamberlain

Managing Director, Polaris Compliance Consulting, LLC

(888) 240-4299

www.polariscompliance.com