The Box Tops gave us the first rendition. Joe Cocker gave us a stirring cover. If you're old enough to know what I'm talking about, you may recall that rockin' tune "The Letter." An updated regulatory version of that classic was recently performed by the Financial Industry Regulatory Authority, Raymond James, and probably Wells Fargo. In the 2016 song, the lyrics are about Advisor of Record Change Letters. As is apparent in the recent version of this classic, my baby didn't sign her letters. In fact, my baby didn't actually send the letters. Moreover, in a further twist on the old theme, today's Respondent didn't care how much money he got to spend because it seems he was sort of broke. Oh my, how the BrokeAndBroker.com Blog loves it when it all comes together in regulation and song! 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, Kenneth Shawn
Hyatt submitted a Letter of Acceptance, Waiver and Consent ("AWC"),
which FINRA accepted. In the Matter of Kenneth Shawn Hyatt,
Respondent (AWC 2014040629101, March 31,
2016). In 1995, Hyatt
entered the securities and industry and was subsequently first registered in
1996. The AWC asserts that
October 2008 to September 2013
Hyatt was dually employed with Firm 3 and as
registered investment advisor
with TSD Capital Group ("TSD"), a private
affiliated with Firm 3. In August 2013 TSD changed its affiliation from Firm 3 to Raymond James Financial
Services, Inc. ("Raymond James" or the "Firm") a FINRA regulated broker-dealer. Around
the same time, Hyatt, terminated his affiliation with Firm 3 and associated with Raymond
September 2013, Hyatt joined the Firm as a Financial Advisor, remaining in
Georgia, office until March 2014 when he was terminated by the Firm for "forgery of advisor of record change
The AWC asserts that Hyatt had
no prior disciplinary history in the securities
SIDE BAR: According to Hyatt's online
FINRA BrokerCheck records as of April 8, 2016, under "Registration History" we
are informed that "The broker previously was registered with the following
firms." During the times relevant to the AWC, BrokerCheck
discloses that from September 2009 to September 2009, Hyatt was
registered with Wells Fargo Advisors Financial Network, LLC and, thereafter,
from September 2013 to March 2014, with Raymond James Financial Services, Inc.
Why the identity of Wells Fargo (apparently "Firm 3") is not stated in the AWC sort of escapes me
but, hey, whatever floats FINRA's boat. I will play along with FINRA's sense of
dramatic fiction and not reference Wells Fargo further but resort to the AWC's
nomenclature of "Firm 3."
The AWC explains that in
September 2013, TSD operated as a "semi-independent team, under the
umbrella of Firm 3," but had decided to affiliate with Raymond James.
In an apparent effort to compensate Hyatt for any business disruption that he would encounter pursuant to the migration from Firm 3 to Raymond James, TSD promised him a $20,000 bonus "if he was able to transfer his accounts from Firm 3
to Raymond James." To effectuate the transfers, Raymond James required
that Hyatt complete and submit Firm 3's "Advisor of Record Change
Letters." (the "Change Letters"). In order to finalized the submission of Firm 3's Change Letters to Raymond James, Hyatt had to obtain each of the plan administrator's
The AWC alleges
that in September 2013, Hyatt forged the signatures of four Firm 3 retirement plan
customers. The AWC further asserts that the forgeries were done without the
clients' prior authorization for the transfers.
Can We Chat?
Following TSD's migration to Raymond James, Firm 3 apparently contacted both TSD and Raymond James and expressed some concerns about the genuineness of the signatures on some of the Change Letters. What prompted that concern is not set forth in the AWC. In apparent response to Firm 3's concerns, on December 6, 2013, March 6, 2014, and March 12, 2014,
TSD and Raymond James compliance personnel confronted Hyatt about the signatures. In response to such queries, the AWC asserts that Hyatt "detailed the circumstances surrounding the Letters and
maintained that all the signatures were genuine and that
they were all signed directly by the plan administrators." The AWC asserts that Hyatt knew his representations about the subject signatures were false.
Hyatt's online FINRA BrokerCheck records disclose that on March 21, 2014, Raymond James "Discharged" him based upon allegations of
FORGERY OF ADVISOR OF RECORD CHANGE LETTER
FINRA alleged that by forging the clients' signatures and knowingly submitting the forged letters, Hyatt violated FINRA Rule 2010; and, further, because his conduct resulted in Firm 3 making and preserving inaccurate books and records in violation of Section 17(a) of the '34 Act and Rule 17(a)-3 thereunder, Hyatt further violated FINRA Rules 4511 and 2010.
In accordance with
the terms of the AWC, FINRA imposed upon Hyatt a 7-month suspension in all
capacities. The AWC further explains
Respondent has submitted a sworn
financial statement and demonstrated an inability to pay. In light of the
financial status of Respondent, the sanctions do not include a monetary
Bill Singer's Comment
Under the totality of the circumstances, Hyatt should consider himself lucky, very lucky, that FINRA only imposed a 7-month suspension without a fine. How did the words of that old, great rock song, "The Letter" go? I don't care how much money I got to spend? Mr. Hyatt got off cheap. He didn't have to spend jack and, frankly, after his 7-month suspension is up, he may well find his way home and back into the biz. Hopefully, this respondent will be wiser for the experience.