Stockbroker Makes Bad Impression Impersonating Customer's Husband

March 28, 2013

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, Wai Keung Man submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted.In the Matter of Wai Keung Man, Respondent (AWC 2011028139-01, March 25, 2013).

Respondent Man first became registered in 1989, and during the time relevant to this matter, he was registered with FINRA member firm Gunnallen Financial, Inc. in 2005 until March 30, 2010. Following a one-year stint from April 2010 to April 2011 at Lantern Financial; Man was registered with Finance 500, Inc. from March 14, 2011 until May 20, 2011. The AWC asserts that Man had no prior disciplinary history.

Gone But Not Forgotten

Gunnallen closed down in early 2010 following Net Capital problems, and, thereafter, the AWC alleges that another brokerage firm assumed the account of a customer of Man's (apparently when the stockbroker was employed at Lantern Financial). While employed at Finance 500, Man sought to transfer this former customer's brokerage account to his new broker-dealer.

Dialing For Dollars

Around April 28, 2011, the AWC alleges that Man telephoned the broker-dealer where the customer had an account and falsely represented himself as her husband in an attempt to obtain the brokerage account's number.

Guessing Game

Why didn't the customer know her account number? The AWC left that out. Had the customer authorized Man to contact the other brokerage firm? That too is left unstated. Was the customer aware that Man was attempting to transfer her account?  Yeah, you got it, the AWC skips over that too.

The Cost Of Impersonation

What we are told is that on May 20, 2011, Finance 500 filed a Uniform Termination Notice for Securities Industry Registration ("Form U5″), which explained that Man had been discharged for violating FINRA Rule 2010.

In accordance with the terms of the AWC, FINRA found that Man had violated Rule 2010 and imposed upon him a $7,500 fine and a six month suspension in any and all capacities from association with any FINRA member firm.

Bill Singer's Comment

As my dripping sarcasm should have clearly conveyed, I don't particularly care for this AWC - not that I disagree with the potential havoc that stockbroker impersonations can cause, to the contrary, I get it.  What I don't like about this regulatory document is that it is just too glib in its rush to note the violation and the sanction.  FINRA routinely fails to appreciate, in my opinion, the need to offer meaningful context and some depth of detail so as to render these regulatory pronouncements more than the clang of the executioner's blade against the beheading stone (quite the lovely image, no?).

I would have appreciated some explanation as to why Man did not try to transfer the customer's account to Lantern but, instead, seems to have waited nearly a year before trying to effect the move to Finance 500. Had there been ongoing discussions with the customer but she refused to agree to Man's entreaties? If that were the case and the stockbroker attempted to relocate the customer's account to Finance 500 without her prior consent and pursuant to the cited subterfuge, then the conduct is actually worse than what has been disclosed to us; if, however, the attendant circumstances are more benign, then we should also have had those factors set forth.

Did Man successfully transfer the account? Was he caught and exposed by the other brokerage firm? Did something happen that resulted in the customer complaining about the moved account? How did Finance 500 discover the issues? Sadly, we are left with the equivalent of a mystery novel with the last chapter ripped out.

As a thirty-year Wall Street regulatory veteran, for me there are far too many questions and dead-ends in this AWC to make if of much use.  While we can smirk at some of the silliness, I would suggest that FINRA's regulatory docket should aspire to more than a comic strip.  The point of publishing these disciplinary matters should be four-fold:

  1. to educate industry participants as to the consequences of misconduct;
  2. to demonstrate to industry participants how to detect the cited misconduct in furtherance of compliance supervision;
  3. to offer, when appropriate, compliant alternatives to the cited misconduct; and
  4. to warn public investors about the existence of the cited misconduct.

Also see these impersonation cases: