During the same week that a House bill was reintroduced by Financial Services Chairman Spencer Bacchus that could pave the way for FINRA to become the financial services industry’s self-regulatory organization, FINRA suspended one of its board members for failure to supervise.
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The three-month suspension and $30,000 fine is based on penny-stock trading activities by a broker at the board member’s firm.
Joel Blumenschein is president of Freedom Investors Corp. FINRA found that the firm acted improperly by failing to supervise the broker and by guaranteeing that the complaining client would not suffer any losses in exchange for an agreement that no formal complaint would be made.
Blumenschein reportedly had difficulty explaining his firm’s supervisory system when questioned. He is being suspended
from his activities as principal and will retain his position on the FINRA board.