A broker-dealer firm settled FINRA charges for causing registered representatives from other firms to disclose nonpublic personal customer information to a third-party vendor.

According to FINRA, during the process of transitioning recruited representatives to its firm, the broker-dealer worked with a third-party vendor to develop a spreadsheet for the purpose of collecting certain customer information from the recruited representatives. The collected information included customers' nonpublic personal information (e.g., social security numbers, driver's license numbers, birth dates and financial position numbers). FINRA found that the broker-dealer violated Regulation S-P and FINRA Rule 2010 ("Standards of Commercial Honor") by causing the recruited representatives to disclose the nonpublic personal information to the third-party vendor without the knowledge or consent of the broker-dealers where the recruited representatives were then registered, or of the representatives' customers.

To settle the charges, the broker-dealer agreed to a (i) censure and (ii) $125,000 fine.


Virtually all of the Regulation S-P violations involving broker-dealers have been in connection with a registered representative changing firms and improperly taking customer information.

Primary Sources

  1. FINRA AWC: Kestra Investment Services, LLC

Originally published April 29, 2020

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