by Bill Singer
Veteran Stockbroker Fined And Suspended For Personal Checkbook Miscues
January 8, 2013For 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, Lisa Ann Timmerman submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Lisa Ann Timmerman, Respondent (AWC 20110292100, January 2, 2013).
Timmerman first became registered in 1995 with First Union Brokerage Services and thereafter was employed with UBS PaineWebber, Citigroup Global Markets, and during the times relevant to this matter with Morgan Stanley Smith Barney until her termination on August 5, 2011.
The AWC alleges that between August 2010 and June 2011, Timmerman wrote 156 checks (ranging from $3.95 to $3,000 each) totaling $78,908 against her brokerage account when she knew or should have known that the account lacked sufficient covering funds. In attempting to cover the debits, Timmerman allegedly used uncleared or insufficiently funded deposits and automatic fund transfers ("AFTs") to cover the checks when they were presented for payment. These deposits were subsequently covered about five business days later without any checks being returned for insufficient ("NSF") funds.
During the course of some 10 months, Timmerman wrote 156 checks for $78,908 - the rough math is about 16 checks a month for an average of $505.82 each, totaling about $7,891 per monthly total. Before you pick up that rock to lob at this registered person, howsabout ya take a look at your own checking account and see how you were doing during those financially challenging days of 2010 and 2011. And keep in mind that not a single one of Timmerman's cited checks was returned as NSF and she covered all the transactions within a few days. Oh, and while you're at it, how many times did you too use the same creative kiting of funds in a pinch over the years?
Separately, on June 14, 2011, Timmerman allegedly caused a $20,000 AFT from her personal bank account to be deposited into her Morgan Stanley Smith Barney brokerage account. On June 17, 2011, her bank informed Morgan Stanley Smith Barney that the AFT was rejected for insufficient funds, resulting in a $25 rejected transfer fee and concomitant negative account balance; however, at the time of the notification, the cited funds had not been used to cover any checks written against Timmerman's brokerage account.
As a result of the negative balance in Timmerman's brokerage account, Morgan Stanley Smith Barney undertook a 12-month activity look-back, which uncovered the 156 checks noted earlier. The AWC asserts that following this discovery, the firm terminated Timmerman on August 5, 2011. According to online FINRA records as of January 8, 2013, the firm provided the following reason for termination:
EMPLOYEE EXECUTED TRANSFERS BETWEEN PERSONAL ACCOUNTS WITH INSUFFICIENT FUNDS; NON-CLIENT RELATED
FINRA asserts that Timmerman's conduct cited above constituted a violation of FINRA Rule 2010, which requires that registered representatives observe high standards of commercial honor and just and equitable principles of trade. In accordance with the terms of the AWC, FINRA imposed upon Timmerman a $5,000 fine and an 18-month suspension (the extent/capacity of the suspension is not noted in the AWC but "all capacities" is presumed by this writer). As permitted under the terms of all AWCs, Timmerman was afforded an opportunity to submit a "Statement of Corrective Action," and she submitted the following explanation:
STATEMENT of CORRECTIVE ACTION
[T]he corrective action I took was as follows:
- Immediately upon realizing I transferred $20,000 instead of $2,000 from Bank of Americato Morgan Stanley Smith Barney I immediately called our FMA Operations Department and was told to transfer the difference from Morgan Stanley Smith Barney to Bank of America. I did as I was told, but it rejected from the system because the fund were not clear.
- When I found out my account had a debit, I immediately reimbursed the account to bring it to a $0 balance.
This Corrective Action Statement is submitted by the Respondent It does not constitute a factual or legal finding by FINRA's policy regarding the publication of disciplinary matters . . .Bill Singer's Comment
So lemme see if I got this.
We got a measly little old broker who's sort of kiting checks in her accounts to make up for some lousy cash flow - as if, what, that's not something far too many individuals and businesses do everyday? Did any of Timmerman's customers get hurt by this? No. Did any bank sustain a loss? Apparently not. Still, FINRA slammed her with a $5,000 fine and a hefty sixteen-month suspension. Oh, sure, now the regulator's playing the tough guy. And, puhlease, gimme a break with that high standards of commercial honor and just and equitable principles of trade garbage! We're talking about Wall Street, right? Honor? Equitable principles of trade? Yeah, sure.
As best I can recollect, leading up to, during, and in the aftermath of theGreat Recession, brokerage firms, insurance companies, and banks fudged their financials and sort of, maybe, perhaps, dipped into customer funds to pay business expenses or plug some leaking holes. When you're a small fry, the regulators get all huffy about your creative accounting and fine and suspend you. When you're a big fish, it's called risk management and any short-cuts are characterized as inadvertent errors. If you can't quite make ends meet, you're expected to borrow money from friends and family, max out your credit card, and use your checking overdraft protection; if Wall Street can't quite make ends meet, it becomes a problem for the American taxpayer and a whole host of defrauded investors. Of course, when Congress and the White House can't balance the budget, well, gee, that's a whole other story. Y'all familiar with the high standards of legislative honor and just and equitable principles of governing?
When I think about AIG, FNMA, Lehman Brothers, Stanford Financial, Madoff, Bear Stearns or MF Global, I have to scratch my head as I read about poor Timmerman. When I ponder the billions of dollars in trading losses and mortgage settlements, I have trouble reconciling the regulatory zeal against a small fry like Timmerman. I'm not quite sure who's setting the regulatory priorities on Wall Street, but I am sure that it's more than a tad hypocritical, sanctimonious, unbalanced, and unfair.