In a recent FINRA regulatory settlement, we know how things turned out: a stockbroker is barred. We even know what caused the mess: the diversion of an elderly customer's checks. What we can't quite figure out is how FINRA found out about the misconduct and what prompted the regulator's ensuing investigation. Yes, it all ends well from a public policy perspective but something just doesn't seem right. We can find the end. We can't quite find the beginning.
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, Daniel N. Winger submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Daniel N. Winger, Respondent (AWC 2018059559101, August 28, 2018).
Winger was first registered in 1986 with FINRA member firm PFS Investments Inc. The AWC asserts that "Winger remained registered with PFS until he was terminated
by Form U5 filed on August 16, 2018 for the conduct described herein."
SIDE BAR: As of September 5, 2018, there is no disclosure of any termination for cause on Winger's online FINRA BrokerCheck file. There is an indication that he is "not currently registered," and his last date of registration is reflected on BrokerCheck as being with PFS Investments as of "08/2018").
Begin the Beguine?
The AWC asserts that:
FINRA began an investigation into this matter after receiving the above-referenced
Form U5 filed by PFS.
As noted in the above SIDE BAR, whatever "this matter" means in terms of its reference in a Form U5 allegedly filed by FINRA member firm PFS, there is no disclosure on Winger's BrokerCheck of the reasons for termination on such a U5. Although the instant AWC is, indeed, disclosed on Winger's BrokerCheck, the purported "termination" is not set forth. In fairness to FINRA, the absence of a disclosure item on Winger's BrokerCheck may mean that the Form U5 did not contain facts requiring disclosure on BrokerCheck or the termination was not reported as "for cause." Other possibilities are that FINRA is mistaken about the existence of the U5, or, that FINRA failed to properly post the "termination" event on BrokerCheck -- or that no such disclosure was filed by Winger and/or PFS.
The Elderly Customer
As to whatever prompted FINRA's investigation, the AWC asserts that between the relevant period of April 2015 and April 2018, an elderly customer gave to Winger some $100,000 in checks made payable to "Dan Winger and Associates." The AWC alleges that the customer:
understood that the checks were to be used for her benefit, including to
pay commissions associated with her brokerage account and for taxes. Winger, however, endorsed the checks, deposited them into a separate bank account, and
used the funds for his own personal use.
FINRA deemed Winger's conduct to constitute a violation of FINRA Rule 2150(a) and 2010 and in accordance with the terms of the AWC, the self-regulatory-organization imposed a Bar from associating with any FINRA member in any capacity upon Winger.
Bill Singer's Comment
As noted above, I am truly puzzled by the apparent disconnect between FINRA's AWC and FINRA's BrokerCheck. If you visit Winger's BrokerCheck file at https://files.brokercheck.finra.org/individual/individual_1542674.pdf , you will notice that it contains only two disclosures: One for the AWC at issue; and the second is under the heading "Customer Dispute -- Settled," which references a 1999 settlement by PFS in which the firm refunded a complaining customer's $10,880 cost of purchasing a variable annuity.
Pointedly, Winger's BrokerCheck has no disclosure of any "Customer Complaint" involving the elderly customer who gave $100,000 in checks to Winger; and there is no disclosure of any "Employment Separation After Allegations."
Hopefully, someone at FINRA who loves to read the ever-informative BrokeAndBroker.com Blog will look into this disclosure or non-disclosure issue. I mean, geez, it's an elderly customer who got ripped off by her stockbroker for six figures. That stuff just can't get lost in the old self-regulatory shuffle. I'm not necessarily sure what a "beguine" is but I do know fraud when I see it and smell it.