In today's blog we consider a former Ameriprise stockbroker who attacked Wall Street's compliance rulebook with abandon. He got two loans from customers but didn't provide his firm with the necessary prior notices. Next, he engaged in a private securities transaction without providing prior notice. Then, our subject engages in an outside business activity without -- you guessed it -- the prior notices. Undaunted, the broker submits false answers to three years of annual compliance questionnaires. So many rivers to cross but he just can't seem to find his way over FINRA.
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, Corey Lee Mireau submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Corey Lee Mireau, Inc., Respondent (FINRA AWC 2017055910301, April 12, 2019)
The AWC asserts that Mireau entered the securities industry in 1998 and by July 2006, he was associated with FINRA member firm Ameriprise Financial Services, Inc. The AWC asserts that "Mireau has no prior disciplinary history."
The AWC asserts that in September 2013, Mireau borrowed $150,000 from his Ameriprise customer KR. The loan was purportedly to be used for Mireau's investment in "VDI, a wholesale company in the e-cigarette business. The AWC concedes the following attributes about the transaction:
[T]he loan was documented by a written agreement pursuant to which Mireau agreed to repay the principal within one year with 10% interest, and share 10% of his initial VDI profits with KR. The loan agreement also permitted Mireau to extend the date on which the principal was due 2 by one additional year. . . .
The AWC alleges that Mireau did not seek prior approval for or disclose his receipt of the loan to Ameriprise. Although Mireau invoked the extension of time to repay KR, the AWC asserts that no repayment, in full or part, has been made as to either principal or interest. Moreover, the AWC alleges Mireau did not notify Ameriprise of the modification to the loan terms when he extended the date of repayment.
Additionally, the AWC alleges that in May 2017, Mireau borrowed $500 from Ameriprise customer RS without obtaining the requisite approval from his firm; and without disclosing his receipt of, the loan. Unlike the $150,000 loan from KR, Mireau fully repaid RS.
The AWC alleges that in accepting loans from his Ameriprise customers KR and RS without first notifying and obtaining written approval from Ameriprise, Mireau had violated FINRA Rules 3240 and 2010.
Private Securities Transactions (PST)
The AWC asserts that in September 2013, Mireau invested $140,000 from the proceeds of KR's loan into VDI shares. Yet again, the AWC alleges that Mireau did not provide the requisite written notice to, or obtain permission from, Ameriprise in connection with the VDI. Moreover, FINRA deemed that in his purchase of VDI securities, Mireau had participated in a private securities transaction without providing prior written notice to Ameriprise, and in violation of NASD Rule 3040 and FINRA Rule 2010.
Outside Business Activities (OBA)
The AWC asserts that in 2014 and 2015, Mireau performed outside consulting work for Ameriprise customer RS and a company owned by RS; and, in 2015, allegedly received $1,250 in compensation for his work. The AWC alleges that Mireau never disclosed his outside business activities to Ameriprise in violation of FINRA Rules 3270 and 2010.
The AWC alleges that in February 2015, February 2016, and February 2017, Mireau completed Ameriprise annual compliance questionnaires ("ACQs") attesting that he had:
not engaged in any private securities transactions for which he had received pre-clearance for from the firm; and
disclosed all current outside business activities to the Firm.
The AWC deemed Mireau's cited ACQ responses to be false in violation of FINRA Rule 2010.
The AWC alleges that in a Uniform Termination Notice for Securities Industry Registration ("Form U5") dated October 12, 2017, Ameriprise reported Mireau's resignation while suspended and under review "for company policy violations related to borrowing from clients and disclosure of outside business activities." Thereafter, the firm filed Amended Forms U5 dated December 6, 2017 and April 3, 2018, disclosing a customer complaint relating to the alleged loans and unsuitable recommendations.
In accordance with the terms of the AWC, FINRA imposed upon Mireau a $15,000 fine, a two-year suspension from association with any FINRA-regulated broker-dealer in any capacity; and further ordered him to pay $154,458,85 restitution to KR with interest. As to the ordered restitution, the AWC provides that:
Restitution amounts ordered, pursuant to this disciplinary action, are due and payable immediately upon reassociation with a member firm, or prior to any application or request for relief from any statutory disqualification resulting from this or any other event or proceeding, whichever is earlier. The imposition of a restitution order or any other monetary sanction herein, and the timing of such ordered payments, does not preclude customers from pursuing their own actions to obtain restitution or other remedies. If for any reason Mireau cannot locate customer KR after reasonable and documented efforts within such period, or such additional period agreed to by the staff, Mireau shall forward any undistributed restitution and interest to the appropriate escheat, unclaimed property, or abandoned property fund for the state in which the customer is last known to have resided.
I specifically and voluntarily waive any right to claim that I am unable to pay, now or at any time thereafter, the monetary sanctions imposed in this matter.