Ameriprise Rep Barred for Unauthorized Mutual Fund Trades

May 30, 2018

In today's Blog we consider the case of a former Ameriprise stockbroker accused of entering 30 unauthorized mutual fund purchases valued at some $260,000. Her brokerage firm seems to have been on top of its compliance duties, and busted the trades. FINRA seems to have been on top of its regulatory duties, and demanded answers. The stockbroker ducked FINRA and was suspended and then barred for her dilatory conduct but -- Eureka! -- after some eight months of playing regulatory hide-and-seek, she gets FINRA to lift the bar when she finally cooperates. And after her belated cooperation, go figure, she winds up barred. 

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, Maria N. Tamburro submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Maria N. Tamburro, Respondent (AWC 2018056872301, May 29, 2018).

The AWC asserts that from November 2011 to October 5, 2016, Tamburro was registered with FINRA member firm Ameriprise Financial Services, Inc. Under the heading "Relevant Disciplinary History" the AWC asserts that:

From July 17, 2017 through September 24, 2017, Tamburro was suspended in all capacities, pursuant to FINRA Rule 9552, for failing to timely respond to FINRA staff's requests for information. 

30 Unauthorized Purchases

The AWC alleges that between September 27 and 29, 2016, without contacting the affected six Ameriprise customers, Tamburro executed approximately 30 mutual fund purchases valued at some $260,000 with $7,549 in charged commissions. The AWC asserts that all trades were reversed by Ameriprise and the customers reimbursed.

One with Insufficient Funds

The AWC asserts that one customer's brokerage account's lacked sufficient funds for the mutual fund purchases; and, accordingly, in five separate transactions, Tamburro sold securities in another brokerage account held by the same customer. Thereafter, Tamburro transferred the proceeds to the purchasing account. The AWC alleges that Tamburro did not have the customer's authorization for the sales or the transfers of proceeds. 

Two With Fee-Only Accounts

The AWC asserts that two of the six cited customers had only fee-based accounts with Tamburro, which apparently prompted her to open commission-based accounts in the customers' names via the unauthorized submission of new account documentation. The commission-based accounts then received the unauthorized mutual fund purchases. 

Rule 8210 Requests

Pursuant to FINRA Rule 8210, Tamburro was requested by to provide documents and information but she failed to respond. On June 21, 2017, FINRA issued Tamburro a Notice of Suspension pursuant to FINRA Rule 9552. On July 17, 2017, FINRA issued a Suspension Letter to Tamburro that stated that she was suspended from associating with any FINRA member in any capacity. Tamburro failed to request termination of the suspension in response to the Suspension Letter and, consequently, on September 25, 2017, FINRA issued a Notice to Tamburro that she was barred from associating with any FINRA member in any capacity. 

SIDE BAR: The July 17th suspension and the September 25th Bar are referenced in the above "Relevant Disciplinary History," 

Belated Cooperation

After receiving the Notice of her Bar, Tamburro contacted FINRA and on October 4, 2017, she provided a partial response to the original 8210 requests. In response, FINRA agreed to vacate the Bar. On November 2, 2017, 244 days after FINRA staff's initial 8210 request, Tamburro completely responded to the original 8210 requests. 

FINRA Sanctions

FINRA deemed Tamburro's 35 unauthorized trades to constitute a violation of FINRA Rule 2010; and her failure to timely respond to requests for documents and information issued pursuant to FINRA Rule 8210, violations of FINRA Rules 8210 and 2010. In accordance with the terms of the AWC, FINRA imposed upon Tamburro a Bar from associating with any FINRA member firm in any capacity.

Bill Singer's Comment

Compliments to Ameriprise for apparently detecting the unauthorized activity, reversing the trades, and reimbursing the customers.

One aspect of this AWC that I don't like is FINRA's muddled presentation of Tamburro's opening of commission-based accounts to facilitate the purchases of the mutual funds. The AWC fails to explain why those fund purchases could not have been placed in the fee-based account. Was this a ruse to generate commissions for Tamburro, which would not have been earned in the fee-accounts? Again, no explanation from FINRA. Yes, as an industry veteran I think I know where FINRA was going but it didn't get there. Moreover, these settlements are published and often serve an educational purpose for the investing public. A bit more care should have been taken with this AWC to explain what was going on here.