During the period from August 2015 to September 2015 Staudacher, while associated with PFS, executed four unauthorized transactions in customer AK's account, and a total of four unauthorized transactions in two of customer YW's accounts. Specifically, on August 24, 2015, a date on which the Dow Jones Industrial Average suffered its largest intraday point drop of more than 1000 points, Staudacher sold three of AK's five equity mutual funds and used the proceeds to purchased shares of a bond fund. Staudacher contacted AK on the evening of the transactions to advise her of his trading activity in her account. Due to continued volatility in the equity market, on September 24,2015. Staudacher sold the remaining two equity mutual funds in AK's account and purchased additional shares ofthe bond fund. Staudacher did not contact AK and obtain her authorization prior to executing any of the above-described transactions in her account. After AK complained, PFS reversed the transactions in her account and made her whole.With respect to customer YW, on August 24,2015 Staudacher sold half of the equity mutual fund positions in both her individual account and her IRA account, and used the proceeds to purchase shares of a bond fund in both accounts. Staudacher contacted YW on the evening ofthe transactions to advise her of his trading activity in her accounts. Staudacher did not contact YW prior to executing the transactions in her accounts. After YW complained, PFS reversed the transactions in her accounts and made her whole.PFS imposed a total of $10,000 in monetary sanctions on Staudacher as a result of his unauthorized trading in the customers' accounts.
During the three-day period from August 25, 2015 to August 27, 2015, Staudacher utilized text messaging to communicate with customers AK and YW regarding activity in their securities accounts. During the relevant time period, the customers were traveling in area where they had limited cellphone coverage and were having difficulty communicating by phone. Customers AK and YW each initiated the text message communications with Staudacher. He subsequently sent a series of securities-related text messages to AK and YW regarding their securities accounts. These electronic communications were not captured, reviewed or retained by PFS, which, pursuant to its WSPs, prohibited the use of text messaging to conduct securities business with customers.
In January 2017, Staudacher entered into an AWC in which he consented to a one-month suspension and $5000 fine for violating FINRA Rule 2010 by making unauthorized transactions and engaging in unapproved securities-related communications with customers in violation of Firm policy.
[O]n February 6, 2017, the first day of his FINRA suspension, Staudacher accessed the Firm's electronic systems and submitted an application for a new securities account held jointly by two customers. That same day, Staudacher evidenced his review of two new 529 plan applications in his capacity as the assigned registered representative by logging into the Firm's systems and marking the applications as approved. Also on February 6, 2017, Staudacher submitted to the Firm's transfer agent a Letter of Instruction from a customer, dated the same day, requesting a transfer from a third-party 401K plan and attaching a check from the customer in the amount of $162,204.On February 7, 2017, the second day of his suspension, Staudacher facilitated redemption requests made by two different Firm customers. At the time, another registered representative of the Firm was designated to service the accounts of Staudacher's customers due to Staudacher's suspension. Rather than directing the two customers to contact the designated registered representative, Staudacher prepared forms used to make redemption requests for each customer and faxed the completed forms and redemption instructions to the designated registered representative.
Prior to submission of new securities account applications, the Firm required customers to review and provide electronic signatures on the completed forms by entering the last four digits of their social security numbers. From February 3, 2017 through February 6, 2017, to accommodate his clients, Staudacher electronically affixed customers' signatures on four new securities account applications by entering the last four digits of the customers' social security numbers on the applications.
CUSTOMER ALLEGES THAT UNAUTHORIZED TRANSACTIONS WERE MADE IN HER ACCOUNTS ON AUGUST 24, 2015
BrokerCheck records disclose under the heading "Judgement/Lien" six events involving what appear to be tax liens/judgments filed by the Internal Revenue Service from 2011 to 2018. The amounts cited run from $5,638.56 to $186,000.I HAD PRIOR DISCUSSION WITH THE CUSTOMER AND UNDERSTOOD THAT I WAS AUTHORIZED TO MAKE THE TRADES AT ISSUE.