January 16, 2014
This BrokeAndBroker Blog is an intriguing tale of what happens when one registered person withdraws funds from 22 customers' accounts and, for good measure, helps herself to $100,000 by writing unauthorized checks from two accounts. If that doesn't whet your appetite, I'm not sure what a teaser is.
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, Michelle Lee Kern submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Michelle Lee Kern, Respondent (AWC 2013035458501, January 7, 2014).
Kern was first registered with FINRA in 2002. The AWC asserts that she had no prior disciplinary history.
Electronic Fun With Electronic Funds
The AWC alleges that between approximately June 2010 and December 2012, Kern engaged in unauthorized electronic withdrawals of about $569,000 from 22 customers' brokerage accounts. The AWC alleges that the converted funds were used to pay Kern's personal credit card bills.
On top of the electronic conversions, the AWC alleges that Kern also converted about $100,000 from two customers by using their checkbooks to write unauthorized checks to herself. In furtherance of this scheme, Kern also accepted checkbooks from two customers based upon her representation that she would destroy the books. The AWC alleges that instead of destroying the books, Kern forged the customers' signatures on some $100,000 in personal checks, which she then into her personal checking account and, thereafter, used to pay her personal credit card bills.
The AWC asserts that nine of the victimized customers were at least 60 years old.
Lowering The Boom
In accordance with the terms of the AWC, FINRA imposed upon Kern a Bar in all capacities from associating with any FINRA member.
Bill Singer's Comment
She used all of the stolen funds to pay her personal credit card bills? I mean, geez, that's what the AWC alleges. Just out of curiosity, how the hell does one person run up some $669,000 in personal credit card bills? And just what were some of those charges? Ahhh . . . to be able to live the lifestyle of the rich and famous, and to be able to do so with other people's money.