(Reuters) - A board member of the Financial Industry Regulatory Authority has resigned after settling a disciplinary case alleging he failed to supervise a broker at his firm, a FINRA spokeswoman confirmed Tuesday.

Joel Blumenschein, president of Freedom Investors Corp, resigned less than three months before his term on the FINRA board was to end. Blumenschein's Brookfield, Wisconsin-based brokerage employs about 30 brokers, according to a regulatory filing.

On April 23, Blumenschein settled the case without admitting or denying the allegations. He was suspended for three months as a supervisor in the securities industry and fined $30,000.

FINRA's allegations against Blumenschein are not uncommon in the securities industry. But his situation is unusual because it marks an instance in which the Wall Street industry-funded regulator disciplined a brokerage president who also happens to be one of its board members.

Reached late on Tuesday, Blumenschein told Reuters he was out of town and hadn't yet officially stepped down. He would complete the process soon, he said.

FINRA alleged that he failed to supervise a broker who engaged in unsuitable penny stock trades in a retirement account for a "a customer of limited means," according to a FINRA regulatory filing. The broker also made transactions in the customer's account without permission from the customer, the filing said.

Efforts to locate the broker late Tuesday were unsuccessful.

The firm's "supervisory system was so inadequate that Blumenschein was unable to provide a consistent or coherent" description of how it worked during testimony, according to the FINRA document. Blumenschein did not admit or deny the findings.

His name did not appear in a list of board member on FINRA's website late Tuesday.

The planned resignation of Blumenschein was reported by the Wall Street Journal earlier Tuesday. 

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