We start with a wife and her children. We add a husband. We toss into that scene a stockbroker. Then come the redemptions. All of which sets the stage for a Wall Street reggae tune about pain, sadness, and a stinging regulatory rebuke. In the lyrics of Bob Marley's song:
Cause all I ever have:
Case In Point
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, Barbara Ann Corner submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Barbara Ann Comer, Respondent (AWC #2012034656401, December 10, 2014).
In 1989 Corner first became registered with FINRA member firm Investacorp, Inc.. The AWC asserts that she had no prior relevant disciplinary history with the Securities and Exchange Commission, any self-regulatory organization, or any state securities regulator.
The AWC alleges that an Investacorp individual account-holder (the "Wife") also acted as trustee and/or custodian for two lnvestacorp accounts held for her children. Apparently, the three accounts held mutual funds.
From October 2004 to January 2011, a total of $197,927.73 involving redemptions from 22 mutual funds were allegedly made from the accounts by the Wife's husband, who had requested the redemptions from Respondent Comer. In response to Comer's requests to process the redemptions, the mutual fund custodian issued checks payable to the Wife and those checks were sent to her address of record.
At the time of the husband's requests for redemptions, the AWC asserts that there was no Power of Attorney or Letter of Authorization on file that authorized him to seek the redemptions or to authorize Corner to accept same. In fact, the AWC asserts that Investacorp's written supervisory procedures prohibited its registered representatives from accepting third-party orders without the accountholder's prior written authorization.
In an Online FINRA BrokerCheck record as of December 17, 2014, Investacorp alleges that October 1, 2012, the firm received a customer complaint in the form of a FINRA Arbitration (12-03295) seeking damages in the amount of $239,832 arising in connection with mutual funds. The firm explained that:
CLAIMANT ALLEGES THAT MS. COMER ACTED WITHOUT HER AUTHORITY.
The online record further notes that the matter settled on August 6, 2013, in the gross amount of $47,500, of which Comer purportedly contribute $423.
As a consequence, FINRA deemed Comer's conduct to constitute violations of NASD Interpretive Material 2310-2; NASD Conduct Rule 2510(b); and NASD Conduct Rule 2110; and FINRA Rule 2010.
In accordance with the terms of the AWC, FINRA imposed upon Comer a Censure and $7,500 fine.
Bill Singer's Comment
Oh my, there is soooooo much missing from this AWC that I'm not sure where to start with my critique. On the one hand, we are told that there were nearly $200,000 in redemptions, but, on the other hand, we are told that the payments were made to the Wife and sent to her address of record. Yeah, I get it, the husband was not authorized to request the redemptions and Comer should not have acted on his instruction. If you think that I'm clueless about this case, please re-read the prior sentence.
Like I said, I get it. Comer was wrong. Period. End of discussion.
What happened to those redemption checks? Did the Wife get them? Did the husband forge his wife's signatures on the redemption payments and convert the funds? Were criminal charges filed? Was there a divorce?
I mean, c'mon, the regulation of Wall Street should not be a game of 20 Questions.
For today's musical interlude, what else but the fabulous "Redemption Song" performed live in 1980 by the incomparable Bob Marley:
And for those of you who prefer the more traditional studio album cut: