Power Play Short Circuits Broker's Career

June 18, 2018

To be a grand thief is often the stuff of legend. We seem to idolize crooks who think big, even when they get caught. We quote Willie Sutton. Al Capone, Jordan Belfort, and Bernie Madoff are the subjects of books and movies. The petty thief, on the other hand, is often viewed with little more than scorn: as if the turnstile jumper and pickpocket should have aspired to more. Master thieves are champs. Petty thieves are chumps. You ask me, they're all losers but, then again, that's just me. In a recent FINRA regulatory settlement we got a stockbroker who threw it all away for a few hundred bucks. At some point in time, he said it was all a mistake. Yeah, sure -- that's an original explanation. Mistake or not, it all comes off as both sad and pathetic. 

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, Justin Travis Mair, submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Justin Travis Mair,, Respondent (AWC 2016051547601, June 13, 2018 )

The AWC asserts that Mair was first registered in 2006, and by May 2012, he was registered as a complex risk officer with FINRA member firm Morgan Stanley 

Power Play

The AWC alleges that between April and July 2016, Mair obtained the account number of a customer identified in the AWC only as "WT" and, thereafter, Mair made four unauthorized Automated Clearing House ("ACH") transfers totaling about $722 from WT's account. The AWC asserts that the funds were used to pay Mair's personal electric bills. 

SIDE BAR: FINRA Rule 2150: Improper Use of Customers' Securities or Funds; Prohibition Against Guarantees and Sharing in Accounts

(a) Improper Use

No member or person associated with a member shall make improper use of a customer's securities or funds.
. . .

Career Short-Circuit

FINRA deemed Mair's conduct to constitute conversion of the customer's funds in violation of FINRA Rules 2150(a) and 2010. In accordance with the terms of the AWC, FINRA imposed upon Mair a Bar from association with any FINRA member firm in any capacity.

Bill Singer's Comment

Online FINRA BrokerCheck disclosures as of June 18, 2018, state that

1) Morgan Stanley Smith Barney had "discharged" Mair on Spetmeber 6, 2016 based upon

Allegations of employee setting up payment from a customer's account to pay employee's electric bill; employee stated that it was a mistake

2) A homeowner's association judgment/lien was filed against Mair on October 29, 2013, for $6,411.28

Interesting dichotomy between the recitation of the underlying facts in BrokerCheck versus the AWC. In the former, Morgan Stanley disclosed that Mair "stated that it was a mistakc," but there is no such assertion in the regulatory settlement. Being the curious fellow that I am, I wonder about the parameters of Mair's confessed "mistake."  Did he claim that he thought he was transferring WT's funds to another authorized account? Did he claim that he had inadvertently transferred the customer's funds to his account? Did he think he was transferring funds from his own account but accidentally entered the customer's account number? 

I'm guessing that whatever excuses Mair conjured up, his attempt at exculpation fell apart when someone at Morgan Stanley Smith Barney said something like:

Justin, listen, I hear you, but, well, that may hold water if this only happened once but, hey, we got four unauthorized transfers. I mean, seriously? Justin, ya gonna sit there and look me in the face and swear that it was all a mistake for each of these four transfers? And, listen, even if I were to buy what you're tryin' to sell me here, how come you never made restitution for all the money you claim you mistakenly transferred out?

If Mair had made a mistake or even exercised bad judgment, then I would have expected two things. One, a very sincere expression of remorse along the lines of this is what happened, it was all my mistake, I'm very sorry, and it will never, ever happen again. Two, a copy of a cancelled check or print-out of a wire transfer showing that the respondent had repaid the "disputed" sum even if such payment was accompanied by a written disclaimer of any wrongdoing. It's one thing to say "I'm sorry." It's quite another to utter those words but hold on to the fruits of your misconduct. Sorry only goes so far.  To be clear, I don't know whether Mair has made any restitution to the client or his firm (which may have made the customer whole). That last bit of information is curiously missing from both the AWC and BrokerCheck.