by Bill Singer
Lonnie L. Dusenberry entered the securities industry in 1998 with Financial Industry Regulatory Authority (“FINRA”) member firm Edward Jones, where he remained through April 26, 2010, as a General Securities Representative. Dusenberry’s employment at Edward Jones was largely uneventful and he incurred no disciplinary history — that is, until FINRA alleged that he improperly borrowed over $740,000 from several of his customers; and that in order to effect two of those loans, he forged customer signatures. In the Matter of Lonnie L. Dusenberry, Respondent (FINRA AWC 20100225164, August 16, 2011).
For purposes of settling the alleged rule violations and without admitting or denying FINRA’s findings, Dusenberry submitted a Letter of Acceptance, Waiver and Consent (“AWC”) that FINRA accepted, resulting in the imposition of a Bar with any member firm in all capacities.
Peter to Paul Borrowing
According to the AWC, between March 2007 and March 2010, Dusenberry borrowed $742,500 from several of his customers in amounts ranging from $16,000 to $100,000. In a number of situations, Dusenberry used the proceeds from one loan to repay an earlier loan from a different customer. Ultimately, Dusenberry failed to repay about $500,000 to his customers.
At all relevant times, Edward Jones prohibited borrowing money from customers unless the arrangement satisfied certain exceptions, such as loans from an immediate family member. Although Edward Jones’ employees were required to obtain the firm’s written pre-approval for all loans, Dusenberry never requested nor received written pre-approval.
Forgery
Moreover, on August 6, 2009, in order to effect a loan from a customer, Dusenberry allegedly signed that client’s name to a Letter of Authorization (“LOA”). Pursuant to that LOA, Edward Jones transferred $30,000.00 from the customer’s account to another customer’s account. On November 2, 2009, in order to effect a loan from a third customer, Dusenberry forged that customer’s signature on another LOA, resulting in the transfer of $32,000 from the victim’s account to that of a fourth customer.
- By borrowing money from his customers in violation of his firm’s procedures, FINRA charged that Dusenberry violated NASD Conduct Rules 2370 and 2110 and FINRA Rule 2010.
- By forging his customers’ signatures, FINRA charged that Dusenberry violated FINRA Rule 2010.