FINRA Sanctions NYLife Stockbroker For Outside Business Activities
Partho Sarathi Ghosh of New York New York a stockbroker registered with NYLife Securities LLC has been fined $25,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to an Extended Hearing Panel Decision containing findings that Ghosh engaged in undisclosed outside business activities. Department of Enforcement v. Partho S. Ghosh, Disciplinary Proceeding No. 2016051615301 (Aug. 7, 2019).
It should be noted that the matter is presently the subject of an appeal by Ghosh. According to Brokercheck:
Hearing Panel decision rendered August 7, 2019 wherein respondent is fined $25,000, suspended from association with any FINRA member in all capacities for six months, required to requalify by examination in any registered capacity requiring qualification, and ordered to pay the costs of the hearing in the amount of $15,347.99, which includes a $750 administrative fee and a $14,597.99 fee for the cost of the hearing transcripts. The sanctions are based on findings that Ghosh engaged in outside business activities without providing prior written notice to his member firm. The findings stated that during the hiring process with the firm and its affiliated insurance company, their corporate compliance department (CCD) instructed Ghosh to dissolve a company that he formed as a condition of joining the firm and its affiliate. Although Ghosh dissolved the company at the direction of the CCD, a few months later he started, and began conducting business activities under, an identically purposed company. Ghosh was its sole owner and director. Several months after forming the company, and just before he became registered with the firm, a firm manager discovered its existence and directed Ghosh to file an outside business activity request for that company with the CCD. This time, however, Ghosh did not immediately comply. Instead, after registering with the firm, he resisted filing the request while trying, without success, to convince firm management that the company was not an outside business activity. Ghosh failed to meet the deadline that firm management set for him to submit an outside business activity submission for the company. However, he completed and filed the firm’s annual compliance questionnaire. Meanwhile, Ghosh provided financial advice and sold firm insurance products through the company. When he finally submitted the outside business activity request several months later, the CCD denied it. But Ghosh continued conducting business through the company. Then within a few weeks, he resigned when the firm told him that his business model was not compatible with the firm and its affiliate’s business. On August 29, 2019, Ghosh appealed the decision to the NAC. The sanctions are not in effect pending the review.
According to the Decision, a company known as Trans Global Inc. had been created by Ghosh prior to his association with NYLife Insurance Inc. and NYLife Securities Inc. He utilized this company to supply financial advice to customers and the company’s focus was financing contingent liabilities. The Decision stated that Ghosh was instructed upon joining NYLife to report this outside business activity through the firm for their review and consideration.
The Decision revealed that Ghosh’s request to engage in the Trans Global Inc. outside business activity had been denied by NYLife Securities. He was told to dissolve Trans Global Inc. if he intended on associating with NYLife. Ghosh reportedly complied; however, a new company, P.S. Ghosh, had been created by him soon after. As was the case with Trans Global Inc., Ghosh was instructed by NYLife Securities to report this outside business activity for their review and consideration.
FINRA indicated that Ghosh did not timely cooperate with NYLife’s request. The Decision stated that Ghosh unsuccessfully tried to persuade the firm that P.S. Ghosh was not considered an outside business activity even though NYLife Insurance products had been sold via P.S. Ghosh and financial advice was provided by him through P.S. Ghosh. The Decision revealed that Ghosh’s request to engage in the P.S. Ghosh outside business activity had been denied by NYLife Securities. FINRA found Ghosh’s engagement in undisclosed outside business activities to be violative of FINRA Rules 2010 and 3270.
Ghosh was terminated by NYLife on September 8, 2016 founded on allegations that he failed to comply with the firm’s policies given his sales strategy.