Stockbroker Only One Call Away From FINRA Fine and Suspension

March 1, 2019

A stockbroker left his brokerage firm and started up his own registered investment advisor. In an excess of woefully misguided customer service, the broker telephoned his former firm's service center pretending to be some of his former customers (who were opening accounts at his new shop). To be fair to the stockbroker, he may have been thinking that he was doing the right thing for his customers, but, you know, maybe he should have given it a bit more thought. Perhaps he thought it was just one call. Perhaps he figured that one call would save each customer a lot of aggravation. To paraphrase the popular tune:

I'm only one call away
I'll be there to save the day
FINRA got nothing on me
I'm only one call away

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, Respondent submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of [Ed: name redacted at the sole discretion of the Blog], Respondent (FINRA AWC 2017054932701, February 26, 2019). 

The AWC asserts that Respondent was first registered in 2007 with FINRA member firm Ameriprise Financial Service, Inc. until his termination on December 27, 2016, for "failure to meet performance expectations and production goals." Thereafter, Respondent allegedly was registered with another FINRA firm until his voluntary resignation in 2017. Also, the AWC asserts that from December 2016 to the present, Respondent was an investment advisor representative at another company which he purportedly established. 

2017 Amended Form U5

The AWC asserts that FINRA's investigation of Respondent was prompted by Ameriprise's filing of a  Uniform Termination Notice for Securities Industry Registration ("Form U5") amendment on July 7, 2017, in which the firm disclosed that it had:

conducted an internal review and determined that, after his termination from Ameriprise, [REDACTED] had called the Firm's service center, identified himself as the Firm's customers, effectuated transactions for three clients, and requested information for additional clients. 

8 Calls, 6 Impersonations

The AWC alleges that in violation of FINRA Rule 2010, during the relevant period between January and June 2017, Respondent had:

impersonated six Ameriprise customers during eight telephone calls made to Ameriprise's customer service center. [REDACTED] conducted each impersonation in order to carry out transactions and requests that these customers had authorized and wanted executed. [REDACTED]  conducted some of these impersonations in order to facilitate the customers' wishes to transfer money out of Ameriprise in order to be managed by [REDACTED] 's new investment advisory firm. Although [REDACTED]  made some of the customers aware of his impersonations, other of the customers were not aware of and did not authorize [REDACTED]  to impersonate them. [REDACTED]  impersonated customers in order to (i) request account numbers and deposit information for the customer; (ii) request that copies of deposited checks be sent to the customer; (iii) request paperwork regarding the liquidation of securities held by the customer; (iv) direct the liquidation of securities held in customers' accounts; or (v) direct the disbursement of proceeds from customers' accounts by check to the customer's home address, or by wire transfer to the customer's bank account. 


In accordance with the terms of the AWC, FINRA imposed upon Respondent a $7,500 fine a 45-calendar-day suspension from association with any FINRA member in all capacities.

Bill Singer's Comment

First and foremost, a nearly spot-on perfect FINRA AWC. In addition to a well-written and explained settlement agreement, the self-regulator's sanctions appear tailored to the specifics of the misconduct at issue and reflect some mitigating circumstances.

Recently, FINRA AWCs have been informing us as to how the self-regulatory-organization first came to learn of the facts that prompted an investigation. For many compliance professionals, such information educates them as to how to better implement and maintain oversight. Similarly, FINRA's glimpses behind the regulatory curtain underscores the critical need for the industry to timely and substantively file various disclosure reports. If any of the good folks at FINRA are interested, this introductory disclosure is a great addition to the AWC. My compliments!

It is interesting to observe Respondent's career arc, which, to some extent detoured with his termination from Ameriprise in December 2016 for apparent lack of production -- but then seemed to become invigorated when he started his own advisory firm that same month. Unfortunately, the next month, Respondent engaged in compliance and regulatory short-cuts that have now sent his career into the ditch for 45-calendar-days of suspension.

Respondent's alleged misconduct occurred in January to June 2017 (on the heels of his December 2016 termination by Ameriprise for lack of production) and involved impersonating six Ameriprise customers during eight telephone calls to his former firm's customer service center. At first blush, it all looks ominous, but, upon closer examination, things look less ominous but still amount to misconduct. Notwithstanding that Respondent's impersonation of the six customers is troubling, the AWC concedes that he used that ruse to "carry out transactions and requests that these customers had authorized and wanted executed." Ultimately, this all comes off as misguided and inappropriate customer service. We should keep in mind that there is no allegation whatsoever that Respondent converted any customer funds. 

The only reason that I say this AWC is "nearly" spot-on perfect is because of one quibble. The AWC asserts that "Although Respondent made some of the customers aware of his impersonations, other of the customers were not aware of and did not authorize Respondent to impersonate them." If we're dealing with dozens of customers, I get FINRA's broad reference to "some" of the customers were aware and "some" were not; but, c'mon, we're dealing with six -- count 'em -- six customers! Some would like not be "one," so, I'm assuming that FINRA's some means two or more of those customers. The AWC should have specified whether two, three, or four of Respondent's customers (out of six) were or were not aware of his intended impersonations. No . . . such numbers don't excuse Respondent's conduct but they would offer better context. If, for example, only one of the six was aware of Respondent's intention to impersonate them, that's a nuance of difference from five of the six were aware.