Regulatory actions against compliance officers catch my attention. I don’t think compliance should be the target unless compliance engaged in the wrongdoing. I saw the action against Joseph Storms, identified as a “compliance associate” and dove in.
Mr. Storms entered the securities industry as a compliance intern in 2005 with FINRA member firm Raymond James & Associates, Inc. I’m not sure what happened during the next ten years, but he is identified as being a compliance associate and was registered with Raymond James as a general securities representative and general securities principal from November 19, 2015 to March 24, 2017.
He was terminated and Raymond James filed the Form U5 in April 2017 reporting that it had discharged Storms for “improperly editing internal branch audit documents.” It took two years, but FINRA filed a complaint in January 2019.
During his time as a compliance associate, Storms’s primary responsibility was to audit branch offices and to perform any follow-up work that resulted from the audits. He would sent out online questionnaires and follow-up with the person depending on the answers.
An example given in the decision is an undisclosed outside business activity. If the response was yes, Storms had to find out more and make sure the firm approved it.
Apparently, that was too much work for Mr. Storms. He would dump the questionnaire responses into a spreadsheet and change the data. He changed 524 questions from 145 registered representatives for 60 branch audits. Instantly, he was caught up on his work.
Apparently his supervisor was not so easily fooled and questioned Mr. Storms about the altered data. I assume that lead to termination.
FINRA followed up with a possible disciplinary action. Apparently it was also too much work for him to respond to FINRA.
This all paints Mr. Storms in a bad light. He failed to even bother defending himself. I’m not sure there is a good defense.
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