Stockbroker Fined and Suspended For Sending Customer Data To New Firm

May 18, 2015

There comes a point in a registered representative's career when it may simply be time to move on. For many reps who decide to relocate, the questions of what information and documents can you take and how can you take them, present challenging issues. If you handle things properly, the move from one firm to another may go smoothly; if you don't handle things properly, the experience can truly be replete with nasty-grams and lawsuits from your former firm and an uncomfortable regulatory investigation from FINRA. Consider a recent example of a change of jobs that didn't end well. 

Case In Point

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, Tracy Lynn Munce submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Tracy Lynn Munce, Respondent (AWC  # 2014041443801, May 13, 2015).

In 2007, Munce entered the industry Tracy Lynn Munce and during the times relevant to this AWC, she was registered with:

  • Cetera Investment Services LLC from October 2011 to November 2013; and 
  • LPL Financial LLC from November 2013 to May 2015
Moving On

The AWC asserts that on November 1, 2013, Munce resigned from Cetera and joined LPL. Upon her registration with Cetera in October 2011, Munce had apparently agreed in writing that she would

not remove any [Cetera] records, documents, or advertising, including customer names and addresses from the premises...or transmit any facts contained in the records.

The Email And Attached File

On the same day of her resignation but before she actually left Cetera, Munce allegedly sent from her Cetera mail account to a personal email account (which was shared with her husband) an unauthorized, email, which had an attached, unencrypted, non-password-protected text file. According to the AWC, that file contained confidential, nonpublic customer information pertaining to over 400 Cetera accounts. The content on that attached text file included customer names, dates of birth, addresses, the last four digits of account numbers, phone numbers, and account balances. 

Forwarding Data to LPL Account

Three days after her resignation and departure from Cetera, the AWC alleges that on November 4, 2013, Munce forwarded the email and attachment referenced above from her personal email address to her LPL email address. After forwarding the information, Munce allegedly created on her LPL computer a spreadsheet using some of the customer information. Thereafter, Munce allegedly used the spreadsheet to create a mail-merge document to notify about 35 customers of her relocation to LPL.

Not Yet Out The Door

Prior to leaving Cetera, Munce also allegedly took a profile screen printout containing confidential, nonpublic customer information pertaining to two customers, who held a joint account. In apparent anticipation that the primary account-holder would transfer the joint account from Cetera to LPL, Munce allegedly pre-populated an LPL Account Application and related transfer forms on LPL's computer systems using the information presented on the Cetera profile screen. Following the mailing to the primary account holder of the transfer forms, that individual declined to move the account to LPL. 

FINRA Sanctions

FINRA deemed Munce's conduct to constitute violations of SEC Regulation S-P and FINRA Rule 2010. In accordance with the terms of the AWC, FINRA imposed upon Munce a $5,000 and a 10-business day suspension in all capacities.

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