By way of spoiler alert, today's BrokeAndBroker.com Blog features the FINRA regulatory settlement of a former Merrill Lynch rep who allegedly took home confidential customer information involving 100 accounts, and, after leaving the firm and the industry, tried to sell the info for $10,000. Not a lot in that fact pattern to engender much sympathy for the guy. In fact, Bill Singer is wondering why FINRA seems to have pulled its punch when sanctioning this respondent.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, Ryan Wallace submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Ryan Wallace, Respondent (AWC 2015047832501, April 7, 2017). The AWC asserts that Wallace was first registered in 2010; and by 2013, he was registered with FINRA member firm Merrill Lynch, Pierce, Fenner & Smith, Incorporated. The AWC asserts that Wallace did not have any prior disciplinary history with FINRA, any state securities agency, the Securities and Exchange Commission, or any other self-regulatory organization. Home Work The AWC alleges that while registered with Merrill Lynch during May 2015, Wallace took home documents that contained "non-public" customer personal information, among which was
a list of the approximately 100 customers in his book of business, and detailed their names, addresses, phone numbers, social security numbers and the amount of money invested in each customer account. . .
FINRA deemed that Wallace's conduct caused Merrill Lynch to violate Regulation S-P and constituted a violation of FINRA Rule 2010. A Matter of Aggravation The AWC asserts that Wallace left the employ of Merrill Lynch on May 15, 2015, and presently remains unassociated with any FINRA member firm. In order to ensure that I properly convey the next regulatory violation, I offer you this verbatim extract from the AWC:SIDE BAR: Regulation S-P prohibits firms from disclosing "nonpublic personal information" about a customer unless the customer receives proper notice and an opportunity to opt out. Non-public personal information generally means any information provided by customers to a broker-dealer to obtain any product or service. It includes, but is not limited to, account numbers, social security numbers, birth dates, and account balances. READ the FULL-TEXT of Regulation S-P
Wallace aggravated his misconduct after he left the Firm. On or about September 15, 2015, when Wallace no longer was employed in the securities industry, Wallace offered to sell to an RR at another FINRA registered broker-dealer, for $10,000, the Firm documents and list of non-public personal information he had taken from Merrill Lynch regarding his customers. To entice the RR to make the purchase, Wallace emailed to the RR a one-page Firm document containing nonpublic personal information of 42 of his former Merrill Lynch customer accounts.FINRA deemed that Wallace's conduct violated FINRA Rule 2010. Sanctions By way of recap, I read the AWC as highlighting three distinct issues: