Thursday, March 6, 2008

Test Taking Scandal at State Farm

Really. Are the continuing ed requirements so onerous that insurance salesman have to get someone to take the tests for them? FINRA fined and suspended 16 current and former registered representatives of State Farm VP Management Corp. of Bloomington, IL, for misconduct involving FINRA's Continuing Education requirements for registered representatives.

According to the press release, nine of the sanctioned representatives were supervisors who directed or allowed subordinates to take State Farm's "Firm Element" proficiency test for them. One was a supervisor who directed a subordinate to take the test for other registered representatives. Six of the sanctioned representatives completed the Firm Element test for their superiors.

To State Farm's credit, the press release makes it a point to state that the representatives engaged in this misconduct without any authorization from State Farm. State Farm reported the misconduct to FINRA after uncovering test-taking irregularities in one of its regions and conducting a preliminary investigation. State Farm then expanded its internal investigation nationwide and provided FINRA with its findings.

Of course, if it was a small BD involved, the president of the BD would have been suspended, the firm fined and sanctioned for inadequate supervisory procedures. Guaranteed.

The individual representatives received fines ranging from $5,000 to $10,000 and suspensions ranging from 30 days to six months. One representative also was barred as a principal. State Farm VP Management Corp. is engaged in the business of selling mutual funds and variable products.
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