Bounced Personal Checks Get Merrill Lynch Broker Suspended By FINRA

April 12, 2012

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, Karen Marie Greene submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Karen Marie Greene, Respondent (AWC 2011027101801, April 3, 2012).

Greene obtained her Series 7 license in May 2001 while employed at Merrill Lynch Pierce Fenner & Smith, Incorporated ("Merrill Lynch"), where she had begun her industry employment in 1993 in an unregistered capacity and would remain until her termination on March 18, 2011.

From February through March 2011, Greene wrote three checks totaling $5,500 from her personal checking account at Affinity Group Credit Union and deposited them into her Merrill Lynch brokerage account. FINRA alleged that she knew at the time of these deposits that there were insufficient funds ("NSF") in her credit union account to cover the checks. In each instance, Greene immediately withdrew the funds from her Merrill Lynch account on the same day as the deposit via multiple ATM withdrawals. Thereafter, each of the three NSF checks were returned.

FINRA Rule 2010 requires the observance of high standards of commercial honor and just and equitable principles of trade, which the regulator deemed violated by Greene's conduct above.

In accordance with the terms of her AWC, FINRA imposed a 3 month suspension from association with any FINRA member in any capacity. In consideration of Greene's sworn financial statement, which demonstrated an inability to pay a fine, no monetary sanction was imposed.

Bill Singer's Comment

The AWC does not indicate whether Greene made good on the $5,500 in bounced checks.  Online FINRA records as of April 12, 2012, indicate that Merill Lynch discharged her on March 18, 2011 for "CONDUCT INCONSISTENT WITH FIRM POLICY REGARDING PRIVATE BANK ACCOUNTS." She is presently employed with UBS.

My ability to fairly comment on this case is blunted by the omission of what I consider a critical piece of information: Did Greene repay the $5,500 and, if so, by what date?

Notwithstanding that factual omission and my reticence to comment further on Greene's situation, I offer this FINRA case as a warning to the hundreds of thousands of Wall Street associated and registered persons, who might, inadvertently or otherwise, find themselves faced with the same predicament. This isn't just about an employee of Merrill Lynch but could impact men and women all over the industry - at Goldman Sachs, at Wells Fargo, at JP Morgan or Morgan Stanley Smith Barney. The overdraft police are coming for you! A bounced check is an atrocious violation of the sacred rules and trust of Wall Street.

Sarcasm Warning/Proceed At Your Own Risk: Of course when the brokerage firm bosses misplace customer funds, run their company into the ground, or purchase a million dollars worth of office furnishings for their corner suite, why, that's not a violation, that's just how the ball bounces when it comes to Wall Street's commercial honor and highly vaunted principles of trade.