C'mon now -- fess up, it's crossed your mind. Why not simply send an email from the branch to your private email address with all your customer's data attached in a worksheet? For starters, there's Regulation S-P. Then there's the whole thing of whether your brokerage firm is going to start screaming about your unauthorized transfer of confidential proprietary data. And then, on top of everything else, there are those dyspeptic regulators.
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, Brian S. Johnson submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Brian S. Johnson, Respondent (AWC 2013035959901, December 17, 2013).
The AWC asserts that Johnson first became registered with FINRA member Anchor Bay Securities, LLC ("ABS") in 2002, where he served as, among other capacities, the firm's Chief Compliance Officer from 2004 through March 2012. The AWC asserts that he had no prior disciplinary history.
The AWC alleges that on March 13, 2012, Johnson sent an email from his ABS email address to his personal gmail address. That email contained an attached Excel file with the customer information of about 232 ABS accounts, some of which were not serviced by him. Among the transmitted data were nonpublic personal information (as defined in Regulation S-P) in the form of social security numbers and/or birth dates. Read Full-Text of Regulation S-P
Out Of Opt-ions
The AWC alleges that the customers were not provided with proper notice or a reasonable opportunity to opt-out prior to the disclosure of their non-public personal information to Johnson, who became a non-affiliated third party of the Firm when he resigned from ABS. Notwithstanding, the AWC asserts that Johnson retained the information following his departure from ABS.
Upon assuming the role of a portfolio manager and director of operations with a registered investment adviser between March and April 2012, the AWC alleges that Johnson utilized the customer information when contacting or attempting to contact some ABS customers for whom he had not previously been the registered representative of record.
Summing It Up
FINRA asserted that by possessing nonpublic personal information for customers at ABS and using it while he was no longer registered with ABS, Johnson acted in contravention of Regulation S-P, and he therefore violated FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Johnson a $5,000 fine and a 10-business day suspension from association with any FINRA member in any capacity.