Well, okay, it's like . . . you know, we had the money here and we thought we could move it there but then we found out that what we thought we had wasn't what we thought or where we thought it was
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Thomas Robert Vodicka submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted.In the Matter of Thomas Robert Vodicka, Respondent (AWC 20100231894, May 31, 2012).
Vodicka first became registered as an Investment Company/Variable Contracts Products Representative in 2004 with Farmers Financial Solutions, LLC; he was also an insurance agent for Farmers Insurance Group from 2004 February 2004 until June 10, 2010. On June 11, 2010, Farmers Financial filed a Form U-5 with FINRA reporting that Farmers Financial had terminated. The AWC asserts that Vodicka had no prior disciplinary history.
At all relevant times, Vodicka maintained a total of four checking accounts:
- an individual account at the Farmers Insurance Credit Union,
- a joint marital account at the Union One Credit Union,
- a business expense account at the Farmers Insurance Credit Union and
- a premium trust account at the Port Washington State Bank.
The AWC alleges that from December 2009 to April 2010, Vodicka wrote 24 checks totaling $32,395 to himself and his insurance agency from his personal and/or business checking accounts when he knew the account contained insufficient funds; thereafter, he deposited the checks into one of his other checking accounts in order to have available funds to pay bills.
One saving grace here is that Vodicka didn't stick the banks with the debits from his deposits because his commissions were credited to the subject account within a few days (the deposits to cover the checks totaled approximately $32,355). By the time his checks cleared, Vodicka was able to temporarily use funds that he did not have to pay personal and business expenses. By reason of this conduct, Vodicka failed to observe high standards of commercial honor and just and equitable principles of trade, and thus violated FINRA Rule 2010.
The AWC asserted that a review by Farmers Insurance's did not disclose any financial impact on Vodicka's customers.
In accordance with the terms of the AWC, FINRA imposed upon Vodicka a $5,000 fine and a six-month suspension.
Bill Singer's Comment
So lemme see if I got this. We got a measly little old broker who's sort of kiting checks in his accounts to make up for some lousy cash flow - as if, what, that's not something far too many individuals and businesses do everyday? Did any of Vodicka's customers get hurt by this? No. Did any bank sustain a loss? Apparently not. Still, FINRA slammed him with a fine and a hefty six-month suspension. Oh, sure, now the regulator's playing the tough guy.
As best I can recollect, there were and are allegations concerning some pretty major brokerage firms (not all necessarily still in business) in which those organizations and some of their senior management fudged their financials and sort of, maybe, perhaps, dipped into customer funds to pay business expenses or plug some leaking holes. When you're a small fry, the regulators get all huffy about your creative accounting and fine and suspend you. When you're a big guy, it's called risk management and any short-cuts are characterized as inadvertent errors.
When I think about Lehman Brothers or Bear Stearns or MF Global, I have to scratch my head as I read about poor Vodicka. When I ponder the trading losses at JP Morgan or the equivocations from Goldman Sachs, Citigroup, and others, I have trouble reconciling the regulator's zeal here. Finally, as the Facebook mess unfolds and I see the finger pointing by Morgan Stanley and the belabored definitions of what's a "customer" from NASDAQ, I'm not quite sure who's setting the regulatory priorities on Wall Street and what considerations are involved.