Stockbroker Alters Customer Phone Numbers and Email Addresses

January 14, 2016

A few weeks ago, you sat down with your manager, who said that, overall, your 2015 performance was good, except, you know, you didn't sell as much house product as the firm wanted and your cold calling isn't quite up to where it should be. Don't get me wrong, you were told we like you, we want you stay, but, to be frank, we think you need to kick yourself in the ass and get it all back into gear. Let's double down on the cross-selling, okay? 

Face it . . . it's been brewing for some time now and that slap in the face during your year-end meeting with the office honcho didn't help. You want outta here. Next week, you're calling back that recruiter whose been after you the last year. You're also going to meet with the competition on the other side of town. Cold calling? Cross-selling? Yeah, right -- how about a little more support from the firm? How about another sales assistant? How about an extra point on the old grid payout? I'll show them some double down!

One bit of advice. If you're planning on jumping ship, whatever cute little tricks you're thinking about pulling to give yourself an advantage -- a headstart before your former firm sends the posse after you and tries to retain your clients -- well, those shortcuts have been done before and they don't always work. Not saying that they don't sometimes work. Just saying that most likely whatever you've heard about or have conjured up, someone has already done it. And someone has likely gotten caught with not so great results. Before you dig deep into the Black Ops of Wall Street's bag of tricks, consider the additional costs of a regulatory suspension and fine.

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, David Michael Mitchell submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of David Michael Mitchell, Respondent (AWC  2013037497001, January 5, 2016).

From 1998  through June 2013, Respondent was registered with FINRA member firm Morgan Stanley or one of its predecessors.The AWC asserts that Mitchell had no prior relevant disciplinary history.

In Anticipation

The AWC alleges that around  June 12, 2013, in anticipation of transferring his registration to another broker-dealer, Mitchell altered 30 items of customer contact information for nine customers.  Among the altered data were 17  telephone numbers and 13 email addresses -- which were altered for 13 accounts.  As explained in the AWC:

[M]itchell's actions were driven by a desire to delay competing Morgan Stanley registered persons from contacting his customers, with the hope of persuading these customers to move their accounts to Respondent's new FINRA regulated broker-dealer employer. Mitchell altered the Firm's books and records by accessing the Firm's computer systems using his Firm-issued unique user identification number and password and manually entering the changes, which consisted mostly of transposing, omitting or adding numbers and/or letters. Mitchell acted without the knowledge or authorization of the affected customers or the Firm.

FINRA Finale

FINRA deemed that Mitchell's actions caused Morgan Stanley's books and records to be inaccurate in violation of FINRA Rules 4511(a) and 2010; and accordingly, his alterations constituted violations of FINRA Rule 2010, In accordance with the terms of the AWC, FINRA imposed upon Mitchell a $5,000 fine and a 30 business-day suspension from association with any FINRA member in any capacity,

Bill Singer's Comment

Although not set forth in the AWC, FINRA online BrokerCheck records disclose that  from June 2013 to the present, he was employed by FINRA member firm Raymond James & Associates, Inc. And for those of you who think a strong opening move when departing your firm is the phone/email-alteration-gambit, please READ (enjoy the music videos below while reading about this not-so clever and not-so original move):

"Jenny Don't Change, Rikki Don't Lose Your Clients' Numbers" ( Blog, January 15, 2015), which discusses a FINRA AWC sanctioning a Morgan Stanley registered representative who allegedly changed client telephone numbers prior to joining Raymond James.