John Chambers Suspended by FINRA Following Alleged Failure to Supervise
John Chambers (CRD #: 1863864), a broker registered with H.C. Wainwright & Company, has been suspended by FINRA, according to his BrokerCheck record, accessed on November 21, 2022. Keep reading to learn more about his conduct as a broker.
On September 23, 2022, John Chambers consented to the entry of findings that he allegedly failed to preserve and reasonably supervise his and his employees’ business-related text messages in his role as H.C. Wainwright’s president and head of investment banking.
Alleged Failure to Preserve Communications
A Letter of Acceptance, Waiver & Consent (AWC) alleged that, between September 2017 and September 2020, at least 24 firm employees used text messages on their personal cell phones to discuss firm business.
H.C. Wainwright allegedly did not obtain or preserve these communications at the time of their exchange and many were allegedly deleted, though FINRA allegedly obtained some messages later during the course of their investigation. The AWC alleged that the failure to preserve these communications impeded two FINRA investigations.
The AWC concluded that this alleged failure to preserve communications on the part of H.C. Wainwright violated Section 17(a) of the Securities Exchange Act of 1934, Exchange Act Rule 17a-4, and FINRA Rules 4511 and 2010. The AWC also concluded that, for his part in the allegations, John Chambers also violated FINRA Rules 4511 and 2010.
Alleged Failure to Enforce Written Supervisory Procedures
The AWC alleged that H.C. Wainwright’s written supervisory procedures (WSPs) prohibited employees from using text messaging for business-related communications, and this prohibition was discussed by the firm’s compliance department several times each year.
According to the AWC, the firm allegedly failed to enforce these WSPs, since senior employees were allegedly sending business-related text messages, and failed to preserve or review these messages.
Finally, the AWC alleged that the firm failed to enforce written policies and procedures designed to achieve compliance with FINRA Rule 2241, specifically concerning the firm’s obligation to manage conflicts of interest.
The firm allegedly prohibited business-related written communications between the firm’s research and investment banking personnel, and unmonitored business-related phone calls between these groups. John Chambers allegedly violated these policies by sending texts and making calls to a research employee using his personal cell phone.
The AWC concluded that the firm violated the following FINRA Rules:
- FINRA Rule 3110(a), (b)(1), and (b)(4)
- FINRA Rules 2241(b)(1) and 2241(b)(2)(G)
- FINRA Rule 2010
Securities Exchange Act of 1934
Section 17(a) of the Securities Exchange Act of 1934 defines the recordkeeping requirements for brokerage firms and other organizations. Rule 17a-4 specifically describes the records to be maintained by brokers, dealers, and certain exchange members.
FINRA Rules 4511 and 2010
FINRA Rule 4511 requires firms to maintain accurate books and records.
FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.
FINRA Rule 3110
FINRA Rule 3110 requires firms to establish systems of supervision in order to maintain their compliance with securities regulations. Sections (b)(1) and (b)(4) specifically require the establishment and enforcement of written supervisory procedures, and that firms review written business communications.
FINRA Rule 2241
FINRA Rule 2241(b)(1) requires firms to establish and enforce policies and procedures to identify and manage certain conflicts of interest related to research reports.
Rule 2241(b)(2)(G) requires firms’ policies and procedures to promote objective research by establishing safeguards against pressure and oversight by investment banking personnel, to prevent their biases or interests from influencing the research.
John Chambers consented to the following sanctions:
- $15,000 fine
- 30-calendar-day suspension
His suspension ran from October 17 to November 15, 2022.
H.C. Wainwright also consented to sanctions:
- $1.5 million fine
- Submission of written certification of the revision of its supervisory systems, policies, procedures, and training related to compliance with the allegedly violated rules and regulations within 60 days of FINRA’s acceptance of the AWC
You can read the full AWC here.
John Chambers has passed the following exams:
- Series 63 – Uniform Securities Agent State Law Examination
- SIE – Securities Industry Essentials Examination
- Series 7 – General Securities Representative Examination
- Series 24 – General Securities Principal Examination
John Chambers is a registered broker in New York.
He has also worked for the following firms:
- Roth Capital Partners (CRD#:15407)
- Merriman Curhan Ford & Company (CRD#:18296)
- Rodman & Renshaw (CRD#:16415)
- Cowen and Company (CRD#:7616)
- Lehman Brothers (CRD#:7506)
- UBS Warburg (CRD#:7654)
- Salomon Smith Barney (CRD#:7059)
- Salomon Brothers (CRD#:740)
- Dillon, Read & Company (CRD#:1650)
Kurta Law Can Help
If you worked with John Chambers and you have concerns about your investments, please contact us today at 877-600-0098 or firstname.lastname@example.org for a free consultation.
For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.