Sometimes Wall Street's compliance smoke alarms do work
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 Francis Martin Florey submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Francis Martin Florey, Respondent (AWC 20110274007, September 6, 2012).
Florey joined Wachovia Securities, LLC in 2007 and first became registered in 2009. From October 26, 2009 through April 8, 2011, Florey was a registered representative at the firm's Paramus, NJ branch office. Wachovia merged with Wells Fargo on January 1, 2009, and became Wells Fargo Advisors, LLC until his termination on April 8, 2011.
On or about February 17, 2011, Florey opened a bank account in a customer's name at ING without the customer's knowledge or authorization; and, thereafter, transferred $116,369.47 from a joint account at Wachovia Bank held by the customer and a second individual to the ING account without the customers' authorization.
On March 9th and 10th of 2011, Florey attempted to transfer approximately $1,561 and $112, respectively, from the ING Account to his Sallie Maeaccount at JP Morgan Chase. When ING requested personal information for verification, on or about March 10, 2011, Florey responded by attempting to impersonate the victimized customer. After Florey was unable to answer certain questions, ING restricted the account and notified its fraud department. ING transferred back the funds to the joint account at Wachovia Bank.
On April 8, 2011, after conducting an internal investigation, Wells Fargo terminated Florey for impersonating a customer and improperly transferring funds from that customer's bank account to another bank account under Florey's control.
NJ Consent Order
In September 2011, Florey entered into a Consent Order with the state of New Jersey Bureau of Securities for impersonating a customer and misappropriating approximately $116,369 from that customer's bank account. Florey consented to a bar from employment in the securities industry in the state of New Jersey and was fined $10,000.
On January 27, 2012, Florey pled guilty to a 3rd degree felony in the state of New Jersey and was sentenced to probation for two years.
Florey violated FINRA Rule 2010 by transferring approximately $116,369 from the Wachovia Bank joint account to an account in the customer's name that he established at ING for his own personal use, without the customers' knowledge or authorization. In accordance with the terms of the AWC, FINRA imposed upon Florey a bar from association with any FINRA member in any capacity.
Missing from FINRA's AWC is a bit more color and detail, which are provided in in the NJ Consent Order:
[A]n elderly woman who has been a Wells Fargo customer for many years. . . has a brokerage portfolio with Wells Fargo worth over one million dollars . . . In February 2011 [she] had a cash balance of $116,369.47 in her Wells Fargo bank checking account.
Apparently, Florey targeted an elderly victim and a wealthy one at that. Further, he wasn't content with a modest rip-off but sought to steal every penny that she had in her Wells Fargo account. About the only puzzling aspect of this case is that Florey appears to have set up the bogus ING account for the purpose of making payments - perhaps monthly??? - to his Sallie Mae account . . . perhaps for the purpose of paying off some education bills?
The positive aspect of this case is that both ING and Wells Fargo appear to have gotten on top of this fraud quickly, particularly ING, and those two institutions utilized their in-house compliance protocols to intercept Florey's theft and to shut him down quickly. At times, Wall Street‘s efforts to detect and prevent fraud work. Job well done here, all around!
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