Confidentiality Agreements—Settling With Customer In Exchange For Customer Agreement Not To Cooperate With Regulatory Authorities
NASD Conduct Rule 2110

Principal Considerations In Determining Sanctions

Monetary Sanction

Suspension, Bar, Or Other Sanctions

See Principal Considerations In Introductory Section

1. Nature of restriction contained in confidentiality clause.

2. Whether respondent voluntarily released customer from terms of confidentiality agreement without regulatory intervention.

3. Whether respondent released customer from terms of confidentiality agreement (as applied to cooperation with regulatory authorities) after regulator advised respondent to do so.

Fine of $2,500 to $50,000.

Consider suspending individual respondent in any or all capacities or suspending firm (and/or responsible individual) with respect to any or all activities or functions for a period of one month to two years.

In egregious cases, expel firm (and/or bar responsible individual) or bar individual respondent.

Failure To Respond Or Failure To Respond Truthfully, Completely, Or Timely To Requests Made Pursuant To NASD Procedural Rule 8210
NASD Conduct Rule 2110 And Procedural Rule 8210

Principal Considerations In Determining Sanctions

Monetary Sanction

Suspension, Bar, Or Other Sanctions

See Principal Considerations In Introductory Section

1. Nature of the information requested.

2. Whether the requested information has been provided and, if so, consider the number of requests made, the time respondent took to respond, and the degree of regulatory pressure required to obtain a response.

Failure To Respond Or To Respond Truthfully

Fine of $25,000 to $50,000.

Failure To Respond Completely

Fine of $10,000 to $25,000.

Failure To Respond In a Timely Manner

Fine of $2,500 to $25,000.

Individual

If the individual did not respond in any manner, a bar should be standard.

Where mitigation exists, or the person did not respond in a timely manner, consider suspending the individual in any or all capacities for up to two years.

Firm

In an egregious case, expel the firm. If mitigation exists, consider suspending the firm with respect to any or all activities or functions for up to two years.

In cases involving failure to respond in a timely manner, consider suspending responsible individual(s) in any or all capacities and/or suspending the firm with respect to any or all activities or functions for a period of up to 30 business days.

Settling Customer Complaints Away From The Firm
NASD Conduct Rule 2110

Principal Considerations In Determining Sanctions

Monetary Sanction

Suspension, Bar, Or Other Sanctions

See Principal Considerations In Introductory Section

1. Whether respondent provided employer with verbal notice of settlement and employer acquiesced, or whether respondent deceived his employer.

2. Whether actions delayed or obviated the filing of required Forms U-4 or U-5 or NASD Rule 3070 filings.

Fine of $2,500 to $50,000.

Consider suspending respondent in any or all capacities for up to two years. In egregious cases, consider barring respondent.