A continuing education cheating scheme has landed at least 63 brokers suspensions and fines from the Financial Industry Regulatory Authority. Four brokers have been barred from the industry for refusing to cooperate with the investigation.
The disciplined brokers certified to the state of New York that they had completed 15 hours of continuing education to maintain their state insurance licenses when, in fact, someone else completed the requirements for them. All 63 brokers received a one-month suspension and a $5,000 fine.
It's possible that more brokers will be disciplined, but FINRA officials would not comment on whether any current investigations are ongoing. The alleged infractions date back to 2022.
Brokers and financial advisors are required to complete continuing education to keep licenses and certifications up to date. The idea is to ensure professionals know current laws and best practices so that clients are ensured a certain level of service and competence.
"FINRA works to enable a fair, balanced, inclusive market where everyone can invest with confidence. To ensure that's possible, we require individuals and firms who wish to conduct business with the investing public to achieve and maintain certifications," Omer Meisel, executive vice president and head of FINRA's National Cause and Financial Crimes Detection Program, said in a written statement. "Test cheaters not only undermine the integrity of the process, but they also hinder the trust of the investing public that they can invest with confidence."
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FINRA disciplinary reports will sometimes include a broker alleged to have cheated on or lied about continuing education, but large sweeps like this happen less frequently.
"FINRA has brought numerous prior AWCs [letters of acceptance, waiver and consent] against individuals who committed misconduct on CE examinations, including cheating on or receiving improper assistance during insurance-related CE examinations," Annette Carpender, senior vice president of FINRA's National Cause Program, said in a statement. "Review of historic AWCs available at FINRA's Disciplinary Actions Online database includes prior instances in which FINRA has issued numerous insurance CE-related AWCs close in time."
How the scheme played out
FINRA officials and documents confirmed that the scheme involved one person completing the CE requirements for each of the 63 brokers, but they did not explicitly say whether that person was paid to do so. In response to inquiries, a FINRA spokesperson said he could only confirm the information listed in the letters of acceptance, waiver and consent. These letters serve as an agreement in which brokers accept disciplinary actions without admitting or denying the allegations.
The 63 letters do not mention whether compensation was involved.
However, an additional separation disclosure on BrokerCheck for Elizabeth Bautista of Pruco Securities mentions payment being involved as a reason for her termination Nov. 29, 2023.
"Registered Principal paid an [sic] 3rd party vendor to complete the required New York Continuing Education Course. RP provided false statements to FINRA and to Company investigators regarding the incident," the record states on May 17, 2024.
A message sent to Bautista through LinkedIn was not returned.
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FINRA declined to name the person who completed CE for the brokers or say whether that person was a FINRA-registered broker.
The regulator did say that at least one FINRA member firm self-reported the CE misconduct by their employees. In a statement about its own brokers provided in response to queries from Financial Planning, Northwestern Mutual said it self-reported the broker misconduct to FINRA in 2023. FINRA confirmed that Northwestern Mutual self-reported misconduct but would not confirm or name other firms.
Pruco Securities also may have notified FINRA of its brokers' wrongdoing. The AWC letter that spells out the suspension and fine for Bautista mentions a form U5 filed in which Pruco states that it had discharged Bautista because she "certified that she had taken New York Continuing Education courses when she was aware that another individual had taken the CE courses on her behalf."
The disclosure spelling out Bautista's termination also preceded her FINRA discipline by almost six months.
Suspended and banned brokers
FINRA officials would not name the disciplined brokers, but a disciplinary database and monthly discipline reports cite 63 brokers as signing AWC letters for essentially identical alleged infractions. The monthly disciplinary reports begin naming brokers for the insurance cheating allegations starting in March 2024, though the alleged infractions occurred as early as 2022.
Those brokers were associated with 15 brokerages: Allstate Financial Securities (1 broker); American Portfolios Financial Services (2); Ameritas Investment Co. (1); Cetera Advisor Networks (2); Concorde Investment Services (1); Equity Services (9); Hornor, Townsend & Kent (1); LPL Financial (1); MML Investors Services (3); Northwestern Mutual Investment Services (20 - with 5 in unregistered capacities at the time of the alleged infractions); NYLife Securities (2); PFS Investments (5); Pruco Securities (7); Securities America (1); Voya Financial Advisors (7).
A list of the brokers and their affiliations is below.
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FINRA would also not name the four brokers it barred but said that those actions came about because individuals refused to cooperate with the investigation by failing to appear for interviews or produce information.
Dozens of brokers are barred every year for not cooperating with investigations, so it's difficult to identify which of them might be involved in the CE cheating scheme. But one seems to be Maryellen Smyth from Northwestern Mutual.
Smyth's AWC says she became associated with Northwestern Mutual in April of 2002 in an unregistered capacity. Northwestern filed forms with FINRA in June 2023 to say that Smyth had been terminated the month prior.
The letter goes on to say that Smyth refused to appear for on-the-record testimony, putting her in violation of FINRA rules.
"The staff issued the request in connection with FINRA's investigation into whether Smyth participated in misconduct by Northwestern employees involving insurance continuing education requirements. As stated during her telephone call with FINRA on September 24, 2024 and by this agreement, Smyth acknowledges that she received FINRA's request and will not appear for on-the-record testimony at any time," the letter states.
When reached via a LinkedIn message, Smyth declined to comment. Her profile lists her as retired.
Broker outcomes
In the majority of the cases — 35 — brokers had no change in employment status with their associated firms after their FINRA disclosures.
Another 11 brokers are simply no longer registered with their firms, though their BrokerCheck records do not indicate why. They also are not registered with different firms.
Five brokers were fired and have not registered with another firm. One additional broker was fired and has registered with another brokerage.
Three brokers — all with Equity Services — were fired and then rehired by the same firm about the time their FINRA suspensions ended. According to disclosures in those brokers' files, "termination [was] required to comply with a regulatory suspension."
Their AWC letters do not mention a termination as being part of their FINRA discipline, and Equity Services did not respond to a request for comment.
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Three brokers were allowed to resign by their firms. Two of those have registered with new brokerages since then.
The final five were at their firms in unregistered capacities but were still bound by FINRA rules.
The disciplined brokers and employees
Below is a full list of those who have so far been disciplined under the scheme. They are sorted by the firm they were associated with when the alleged infractions occurred. Employment status is based on BrokerCheck records.
Allstate Financial Services
- Nathan E. Lemberg: no change to employment status
American Portfolios Financial Services
- John Rosario Emanuele: fired, currently registered with Lebenthal Financial Services
- Vincent Mallon: fired, not currently registered as a broker
Cetera Advisor Networks
- Thomas Joseph Clifford III: no change in status
- Scott Peter Mullady: allowed to resign and now registered as a broker at Arkaidos Capital and a financial advisor at Arkaidos Wealth Advisors
Concorde Asset Management
- Alan Neil Lichtenstein: no change in status
Equity Services
- Vincent Catanzaro: no change in status
- Sanford Jay Cohen: fired and then rehired after FINRA suspension
- John Francis Coleman: no change in status
- Jack S. Falzone Jr: no change in status
- Cole Fleming: no change in status
- Edward John Kotak Jr.: fired and then rehired after FINRA suspension
- Nicholas A. Marchelos: no change in status
- Alfred William Schefer: fired and then rehired after FINRA suspension
- JoAnn Weihs: fired and then rehired after FINRA suspension
Hornor Townsend & Kent
- Jeremy Isleman: fired, not currently registered as a broker
LPL Financial
- Arnold Frank Feldman: not currently a registered broker
MML Investors Services
- John Franzino: allowed to resign, and now registered with Ameritas
- Salvatore Rosario Tringali: no change in status
- William Pergola: no change in status
- Matthew Robert Wilkow: no change in status
Northwestern Mutual Investment Services
- Vincent Joseph Cagnina: not currently a registered broker
- Linda Chan: no change in status
- Joseph Duffy Collins: no change in status
- Ashley Marie Curreri: not currently a registered broker
- Maureen Joann D'Amico: no change in status
- Brad H. Davidoff: no change in status
- Michael Louis Esposito: allowed to resign, with no new registration
- Gloria R. Geslak: unregistered representative
- Charles Jay Gross: unregistered representative
- Robert Edward Johnson: no change in status
- Taulant Matthew Kodi: unregistered representative
- Yuqing Lin: no change in status
- Joseph Kevin Mathesen: no change in status
- Matthew Joseph Mathesen: no change in status
- Lauren Catherine McNeill: no change in status
- Tara Ann Nesdill: unregistered representative
- Maureen A. O'Donnell: no change in status
- James W. Pruitt II: no change in status
- Maryellen Smyth: unregistered representative, fired.
- Tara Scalia Quilty: no change in status
NYLife Securities
- Albert Mosseri: not currently registered
- Jeffrey Louis Payne: not currently registered
PFS Investments
- Jared Berrios: no change in status
- Shanon Gut: no change in status
- Amina Kennedy: no change in status
- David M. Reyes: no change in status
- Monique Russell: no change in status
Pruco Securities
- Steven Aibel: not currently registered as a broker
- Elizabeth Bautista: fired, not currently registered as a broker
- George Michael Condzal: not currently registered
- Rosanne Rolon Gil: not currently registered
- Angel Lynn Gulizio: not currently registered
- Michael Hartnagel Jr.: fired, not currently registered as a broker
- Christopher Charles Mancini: not currently registered
Securities America
- Scott Lewis: not currently registered
Voya Financial Advisors
- Thakoor Ben Balkaran: no change in status
- Rod Charles Dayton: no change in status
- Christopher Frank Deo: no change in status
- Stephen Frank Grande: no change in status
- Salvatore Anthony LaRocca: no change in status
- Barbara Suzan Savin: no change in status
- James V. Scheidel Jr.: no change in status
Additionally, four brokers — Maureen Joann D'Amico, Robert Edward Johnson, Yuqing Lin and Joseph Kevin Mathesen, all of Northwestern Mutual — have disclosures initiated by the state of Maryland in which they consented "not to apply or reapply for registration as a broker-dealer, agent, investment adviser, or investment adviser representative" there.
A spokesperson for the Maryland attorney general's office did not respond to questions about the brokers.
Brokerage responses
Financial Planning reached out to all the brokerages whose employees were so far disciplined.
Most firms did not respond to requests for comment.
A spokesperson for Osaic, of which American Portfolios Financial Services and Securities America are part of, declined to provide a response.
These are the response statements from other brokerages.
National Life
"National Life Group is fully committed to strict compliance with regulatory requirements. Our broker dealer fully cooperated with FINRA's investigation from the very beginning. National Life Group also conducted a thorough internal investigation and took appropriate disciplinary action when it was warranted. We hold all financial representatives and their teams to the highest standards, expecting them to not only meet continuing education requirements, but also to fully comply with all company policies."
Northwestern Mutual
"Northwestern Mutual takes matters of governance and compliance seriously, including our responsibility to regulatory bodies and our commitment to meeting continuing education requirements. Upon becoming aware of the matter last year, we took immediate steps to self-report to the appropriate regulatory bodies, began a thorough investigation regarding continuing education practices, and took corrective action.
"It is our expectation that all financial representatives and their teams individually meet the continuing education requirements necessary to keep their licenses and registrations current. This also includes following all company policies and individual requirements of each testing authority when completing ongoing education obligations. We are glad to have brought this matter to a close."
PFS Investments
"Continuing education ensures our representatives remain up-to-date on current laws and regulations and we do not tolerate representatives who do not comply. The representatives mentioned as part of this action were suspended by Primerica during the investigation and prior to the penalties issued by FINRA."
Voya Financial
"The impacted Voya Financial Advisors (VFA) representatives have served their discipline with FINRA as part of this incident. It is important to note that FINRA did not find VFA to be responsible in its supervision of our reps and did not impose discipline against the firm. At the same time, Voya takes this matter seriously and the reps remain on heightened supervision. We remain committed to maintaining the trust and confidence that our clients place in us and our reps. We continue to work with our financial professionals to ensure they remain aware of their regulatory obligations to ensure such events do not reoccur in the future."
