How Do You Answer When Temptation Knocks?

By Julie Mendel, Senior Product Manager
Apr 8, 2019
how do you answer when temptation knocks Rarely does anyone start their day with the goal of intentionally making bad decisions. Often times bad decisions are the result of opportunity presenting itself. You tell yourself it is easy and will speed up the process to everyone’s benefit. Sir Walter Scott, in his poem Marmion, said “Oh! What a tangled web we weave when first we practice to deceive” and it’s a great reminder to consider the consequences of all of your actions.

A good decision may look like this: Your child plays soccer in a recreational league, you are asked to be one of the coaches, you notify your employer of your outside business activity, you receive approval for the outside business activity, you report it on your annual compliance questionnaire, your coach your team to a championship and along the way teach them to be good sports and to follow the rules. Do you see the chain reaction?

Decision  Notice  -> Approval -> Reporting -> Championship Team -> Role Model for Good Sportsmanship.

Let’s look at the domino affect of a bad decision. Let’s say a registered representative at your firm signed a customer’s name on a distribution request without the customer’s knowledge or authorization. The unauthorized signature causes a transfer of funds to the wrong account and the transfer of funds causes potential tax consequences for the customer. The customer files a formal complaint. Even if the firm is able to address the customer complaint in a timely manner and reverse the transaction without the customer incurring negative tax consequences, the last domino has not yet fallen – the transaction that started this chain reaction also caused the firm to maintain inaccurate books and records. This bad decision had an adverse effect on the representative, the customer, and the firm. It looked like this:

Decision -> Forged Client Signature -> Transfer of Funds (to the wrong account) ->Customer Complaint -> Inaccurate Books and Records.

It is critical that processes are followed by representatives and monitored by the firm to ensure that bad decisions are avoided and all your dominoes are left standing. For additional illustrations of the domino affect of bad decisions, review the disciplinary actions published by FINRA on a monthly basis.

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