Negligence Prompted Good Faith Alteration Of UBS Customer Phone Records

April 19, 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, Terry L. Pickering submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Terry L. Pickering,Respondent (AWC 2011030155301, April 10, 2013).

Pickering first became registered as a General Securities Representative in 1998 with Citigroup Global Markets, Inc. ("Citigroup"); thereafter, in 2007, she joined UBS Financial Services, Inc. ("UBS" ) where she was employed as an administrative assistant until her October 14, 2011, resignation, at which time she joined Morgan Stanley Smith Barney ("Morgan Stanley"). The AWC asserts that Pickering had no prior disciplinary history.

Movin' On

Pickering was the primary administrative assistant for a UBS general securities representative (referred to as "RS" in the AWC), who by October 13, 2011, had accepted an offer of employment with another FINRA registered firm (and Pickering had also agreed to move to that firm).

No Sale

Before I offer the facts set forth in the AWC, I gotta warn ya that I'm not really buying whatever FINRA seems to be selling to us in terms of its official explanation. I have my sense of what likely went on here; and even if I accept FINRA's assertions, they are so oddly offered that I'm not quite sure whether the self-regulatory organization is attempting to sanitize the fact pattern or whether it was just a slap-dash effort. You draw your own conclusions.

Good Faith Reliance On Negligence?

Consider this nugget from the AWC:

On October 13, 2011, RS negligently made a statement that Pickering interpreted as an instruction to alter his customer's telephone records in the Firm's Client Account Information System ("CAI System"), the Firm's electronic database that contained customer information including accounts, date of birth, address, telephone numbers and e-mail addresses. Pickering acted under the good faith belief that she had received an instruction from the registered representative whom she was tasked to assist and from whom she regularly took direction. Pickering changed or deleted approximately 109 telephone numbers to report inaccurate information. Pickering made these changes without the knowledge or authorization of the affected customers. These changes affected approximately 40 customers on UBS’s CAI System.

Okay, so lemme see if I got this. RS "negligently" made a statement - the statement that set off this entire regulatory mess. And just what was that critical statement? It's not stated in the AWC. That negligent remark that Pickering somehow misinterpreted in good faith - the AWC doesn't even offer us a paraphrase. I mean, seriously? This is what passes for regulation in 2013?

On top of RS negligently stating something, we are then asked to believe that Pickering somehow "interpreted" this unstated negligence into "an instruction to alter" RS' customer's phone records. My, how absolutely brilliant of Pickering to take it solely upon herself to screw around with her stockbroker's customers' phone records.

Howsabout we all ask ourselves to come up with a plausible reason to alter customer phone records. I'm a three-decade Wall Street veteran and former registered representative. I know a likely explanation and I think that most industry veterans do too. One outlandish guess and wild bit of conjecture is that by altering my current employer's list of my customers' phone numbers, I impede the ability of that employer to contact my accounts after I have left and make it all the more difficult for my former firm to persuade my clients to remain. Not that anyone would ever, ever try such a trick, course not (he says with dripping sarcasm - sorry if I wet your shoe there). Like I said, the AWC is mum and I have no factual basis upon which to guess anything.

On top of all this amazing and fairly breathless stuff about negligence and initiative, the AWC sort of comes to Pickering's defense by characterizing her understanding as "the good faith belief that she had received an instruction. . ." Which raises the question as to why FINRA charged Pickering, who acted in good faith upon the apparent instructions made negligently by her superior RS. Sadly, there is no answer to that in the AWC.

Returning The Genie To The Bottle

In any event, on the morning of October 14th, Pickering reversed at least some of the alterations she had made the day before to the CAI system - at a time before anyone at UBS was the wiser or so much as said a word to her. In fact, the AWC asserts that it was only later that same day when UBS's branch office management received a report that Pickering had made numerous changes to customer contact information and queried her about her conduct. In response, Pickering admitted that she had altered the information - at which time, UBS immediately suspended her. After being suspended, we are told that Pickering resigned.

FINRA's Charges

Summing it all up, the AWC alleged that Pickering caused alterations to customer telephone records maintained by her member firm employer, in violation of FINRA Rule 2010. By virtue of that conduct, she also violated NASD Rule 3110 and FINRA Rule 2010 in that she caused UBS to create and maintain inaccurate books and records in violation of Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-3 promulgated thereunder.

In accordance with the terms of the AWC, FINRA imposed upon Pickering a $5,000 fine and a 10-business-days suspension from association with any FINRA member in any capacity.

Also READ:

The Old Client Phone Number and Email Address Switcheroo Backfires on UBS Broker