January 22, 2014
As the lyrics to the old Blondie song go: One way or another I'm gonna getcha, I'll getcha, I'll getcha getcha getcha getcha. Okay, so, not exactly a loving ballad but, perhaps, an anthem for prosecutors, regulators, and jilted lovers. In today's BrokeAndBroker Blog we see the lengths to which a stockbroker's ex went to jam him up; and, as if that bit of revenge weren't enough, there's also the lovely shot from FINRA that's a sour cherry on top.
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, Eric A. Stewart submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Eric A. Stewart, Respondent (AWC 2010024418901, January 9, 2014).
Stewart entered the securities industry in 2004 and by 2006, he was registered with Ameriprise Finance Services, Inc. (''AFSI"). The AWC asserts that he had no prior disciplinary history.
Fobbing It Off
Sometime around 2006, the AWC asserts that Stewart began using his business laptop computer in connection with brokerage services he provided to his AFSI customers. Previously, the computer had certain software and encryption protection installed and Stewart was given a key fob that generated a password to be entered into his laptop in order to access confidential customer information.
Is It Safe?
At this point, the AWC asserts:
3. At some indeterminate point in time, Stewart downloaded documents containing non-public personal, confidential information ("PCI") involving a few of his customers to his laptop. This PCI was not subject to the software system and encryption protection system.
4. Specifically, the PCI contained in those documents included the following: social security numbers, account numbers, birthdates, net worth, account balances, gross income, itemized cash flow, life insurance policy numbers and pension and social security benefits.
At the time of the PCI downloading, AFSI had implemented procedures to ensure the confidentiality and security of client information and records on its registered representatives' laptop -- among such requirements were to ensure that the laptop was secured when not in a representative's possession. Further, at a time when the laptop would no longer be used for AFSI business, the firm's policies required that the computer either be properly disposed or re-purposed so that all customer information was erased.
In April 2011, the AWC asserts that FINRA was notified by a former customer of Stewart's - who is also characterized as his "former domestic partner" - that she was in possession of the laptop and that it contained PCI. Thereafter, FINRA obtained the laptop, analyzed its contents, and confirmed the existence of several customers' PCI. Accordingly, FINRA alleged that Stewart had violated NASD Rule 2110 and FINRA Rule 2010.
In accordance with the terms of the AWC, FINRA imposed upon Stewart a $5,000 fine.
Bill Singer's Comment
I wish that the AWC had better explained just what the hell happened here.
As set forth in the AWC, there appear to be two possible explanations as to the computer hardware involved in this matter:
- Stewart had a "business" laptop computer and a second laptop; and only the former was loaded with both the software and encryption protection. As such, he may have downloaded the PCI onto the unprotected second laptop; or
- Stewart's "business" and other laptop are, in fact, one and the same, but, somehow, Stewart downloaded the PCI onto his laptop in a manner that circumvented the installed protection. Whether or not the short circuiting of the protections was intended by Stewart is not asserted in the AWC.
Also unclear in the AWC is whether Stewart's former domestic partner took possession of the laptop without Stewart's knowledge or authorization, or whether Stewart had moved out of their residence and left the laptop behind (inadvertently or otherwise).
Perhaps the absence of any suspension of Stewart and the relatively modest $5,000 fine reflects FINRA's consideration of some of the nuances of this matter. One way or another, however, it seems like Stewart's former domestic partner got even with him.