The Financial Industry Regulatory Authority is penalizing a former broker for violations that include a failure to disclose outside business activity, according to Advisor Hub.
In a settlement letter, FINjRA disclosed that Michael T. Shoniker, who worked at retirement plan provider Paychex Securities, agreed to a $7,500 fine and six-month suspension. Shoniker did not admit or deny FINRA’s finding, which said that he had failed to properly disclose a referral agreement with an outside registered investment advisory firm.
Regulators said that from July 2017 to February 2023, Shoniker received $740,000 for sending 401(k) customers to the RIA. The payments represented a portion of the advisory fees that the RIA collected from 96 Paychex customers referred by Shoniker.
Paychex permitted registered representatives to refer 401(k) customers to third-party investment advisors. But the firm’s written supervisory procedures prohibited registered representatives from engaging in any outside employment or receiving compensation for services rendered, including finder’s fees, investment advisory fees, and commissions of any sort, without Paychex’s prior written approval.
Shoniker was found to be in violation of FINRA Rule 3270, which states, “No registered person may be an employee, independent contractor, sole proprietor, officer, director or partner of another person, or be compensated, or have the reasonable expectation of compensation, from any other person as a result of any business activity outside the scope of the relationship with his or her member firm, unless he or she has provided prior written notice to the member, in such form as specified by the member.” He also violated Rule 2010 stating that members shall observe high standards of commercial honor and just and equitable principles of trade. FINRA said its investigation originated with a Form U5 termination filing from PayChex in February 2023.
Shoniker did not respond immediately to a request for comment through LinkedIn. His lawyer, Michael A. Gross, a partner in UB Greensfelder in Boca Raton, Florida, did not immediately respond to an emailed request for comment.
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