National Securities Corporation discharged Lian after discovering that he accepted a cash gift of $8,000 in 2017 from a client without notifying the firm or requesting permission before accepting. The gift was made while he was registered with Aegis, as a “thank-you” for a recommendation. Lian also circumvented Aegis’ written policies to conceal the gift from the firm, which prohibited anything over $100. National discharged Lian on those grounds.
FINRA initiated an investigation and twice requested information from. After ignoring these requests, Lian finally supplied FINRA with the requested documentation. Michael Lian was then suspended for 8 months and sanctioned with a $10,000 fine. He signed the Letter of Acceptance, Waiver & Consent (AWC) and the suspension became effective on 12/2/2021, set to end 8/6/2022.
Michael Lian has one additional disclosure, dated. 12/12/2012. A client dispute alleges that Lian “misrepresented a recommendation to purchase VHC.” The client requested damages of $14,000 and the claim was settled for $6875. No additional information is available.
Brokers Or Financial Advisor Cannot Take Gifts
If you have been working with a broker or financial advisor for a long time, chances are you’ve become friends with them. It happens frequently, and many friendships last for years, even after the end of the business relationship.
But it can become problematic if you decide to give him or her a gift for a special occasion, such as a promotion or birthday. He or she could face disciplinary action from their firm, or from FINRA.
The last thing you want to do is get them into trouble with their firm, or worse, FINRA, because they accepted a gift that was large or undisclosed. FINRA Rule 3220 specifically addresses gifting between financial advisors and their clients.
So how do you give your broker friend a nice gift and follow the rules? Two ways to make sure your gift is compliant are:
- The gift is under $100, per person, per year (such as a broker and their assistant)
- Make sure it’s obvious that the gift is personal, and not in any way intended to influence the recipient to avoid any appearance of a conflict of interest
The rule has limited exceptions for personal gifts, such as a wedding gift or baby gift. The stipulation is that these gifts are “not in relation to the business of the employer of the recipient.” Also, many firms have rules about cash and cash gifts, even under $100. Some firms may prohibit cash gifts in any amount.
The investment advisor is not allowed to solicit gifts and should also decline to accept anything that’s inappropriate. This can include entertainment, special accommodations or any items of any value that appear to affect decision making or make them feel obligated to reciprocate to a client or vendor.
Did Your Financial Advisor Improperly Take Money From You?
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