by Bill Singer
For the purpose of settling rule violations alleged by the Financial Industry Regulatory Authority (“FINRA”) and without admitting or denying the regulator’s findings and without an adjudication of any issue of law or fact, Brandon Garrett Searcy submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Brandon Garrett Searcy (AWC, 2011026299401, December 1, 2011).
In August 2001, Searcy first became registered in the securities industry and arrived at Banc of America Investment Services (“BOA”) in June 2005. On January 7, 2011, BOA terminated him.
NSF Checks
During the first two weeks of November 2010, Searcy allegedly wrote three checks totaling $400 from his BOA checking account that he deposited into his BOA savings account – on the same day that Searcy made the savings account deposits, he also withdrew the deposited amount using his debit card at an ATM.
FINRA alleged that Searcy deposited into his savings account each check knowing that there were insufficient funds to cover the amount of the drawn check; and, similarly, there were insufficient funds in his savings account to cover the withdrawal. As such, FINRA had Searcy coming and going: He issued checks against insufficient checking account balances and he withdrew from his savings account sums attributable to those kited checks.
Violations and Sanctions
Not only was Searcy’s alleged conduct contrary to BOA’s policy regarding personal accounts, but FINRA alleged it to be a violation of its Rule 2010 for failing to “observe high standards of commercial honor and just and equitable principles of trade.” In accordance with the AWC, FINRA imposed upon Searcy a three-month suspension with any FINRA member firm in any capacity and a $2,500 fine.
Bill Singer’s Comment
Wall Street employees may be surprised – perhaps stunned – by this case. After all, it’s not as if Searcy’s alleged misconduct involved either a public customer or securities fraud. To the contrary, Searcy ran afoul of the purported “high standards of commercial honor” and “just and equitable principles of trade” that are supposedly hallmarks of Wall Street.
Wall Street’s “high standards” and “just and equitable principles.” Ummm, is FINRA really serious? Just exactly when did the securities industry impose such vaunted standards and principles upon itself – maybe I missed that day?
Then of course, there’s the whole BOA as victim scenario. BOA — as in the firm that’s trying to cut a settlement for hundreds of millions of dollars related to allegations of its role in mortgage market fraud and questionable overdraft fees on debit cards. Of course, the Department of Justice and the Securities and Exchange Commission don’t always pound away at the highly standarded and principled BOA but, hey, what else is new. BOA, Wells Fargo, UBS, Goldman Sachs, Morgan Stanley, Bear Stearns, Lehman Bros., JP Morgan, and, now Brandon Searcy. All in the same FINRA enforcement boat. All treated the same. Blind justice. Blind regulation.
Yeah, right.
So, the small fish Searcy gets a three-month vacation and a couple thou in fines as his punishment. Frankly, ho hum. If there is anything remarkable about this case, it’s that the zealous cops at FINRA managed to investigate and resolve this tempest in about one year – a very aggressive timeframe for a regulator that has come under fire in recent years for not being overly aggressive or successful.
If the outcome in this case is any harbinger, I’m sure Jon Corzine is quaking in his boots. Wall Street’s cops are hot on his MF Global heels. Ready to pounce and close out the case within a year. After all, if FINRA comes after him and actually manages to establish credible allegations of misconduct, why, geez, Corzine could easily find himself with a three month suspension and a $2,500 fine. I mean, you know, given all the high standards and principles stuff.
I’m sorry if my dripping sarcasm splashed you. Can I lend you a towel?
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