Today's featured FINRA regulatory case is about a Wells Fargo employee who was charged with converting funds from his employer and failing to fully cooperate in FINRA's ensuing investigation. Against that background of alleged misconduct, we witness an individual struggling with an opioid addiction and rehabilitation. It is a life spiraling out of control and a career headed into oblivion. There is no victory here. It is merely the devolution of a promising life into tragedy. Hopefully, the respondent will find redemption. Hopefully, the publication of this case may prompt others to seek earlier help or cause their friends and family to undertake earlier intervention.
2018 FINRA OHO Decision
In the Matter of Department of Enforcement, Complainant, vs. John Anthony Vedovino, Respondent (FINRA Office of Hearing Officers Decision; Complaint No. 2015048362402 / July 5, 2018)
http://www.finra.org/sites/default/files/OHO_Vedovino_2015048362402_070518.pdf Respondent Vedovino was first registered in 2013 and from May 2014 until his December 2015 discharge, he was associated with Wells Fargo Advisors as a financial analyst in training and a registered representative. As set forth in the "Introduction" portion of the 2018 FINRA Office of Hearing Officers Decision ("OHO Decision")
Over a six-month span, while registered with FINRA as a General Securities Representative at member firm Wells Fargo Advisors, LLC, Respondent John Anthony Vedovino used his Wells Fargo Bank accounts to make a number of purchases and cash withdrawals. After each transaction he contacted the bank, claimed that someone had made a purchase or withdrawal without his consent, and asked for reimbursement. Relying on Vedovino's misrepresentations, Wells Fargo Bank reimbursed him for all but one of the transactions. When the bank later investigated and confronted Vedovino, he admitted his wrongdoing and Wells Fargo Advisors terminated his employment.
When FINRA investigated, it issued requests to Vedovino pursuant to FINRA Rule 8210 to provide testimony at an on-the-record interview ("OTR") and to produce documents related to his bank accounts. Vedovino did not testify and provided only a late, partial response to the document requests. FINRA's Department of Enforcement then issued the Complaint in this disciplinary proceeding. The two causes of action allege that Vedovino: (i) converted Wells Fargo Bank funds, in violation of FINRA Rule 2010; and (ii) failed to provide testimony and documents, in violation of FINRA Rules 8210 and 2010.
The parties filed joint stipulations agreeing to most of the facts underlying the Complaint. As noted below, Vedovino's testimony at the hearing differed from some of the stipulations. However, the differences are minor and do not materially alter the thrust of the stipulations, by which Vedovino substantially concedes that he engaged in the misconduct alleged in the Complaint.
There are two points of contention between the parties. The first concerns whether Vedovino's conversions of bank funds from his own checking account qualify as business-related conduct regulated by Rule 2010 Enforcement asserts the conversions are within the reach of the rule; Vedovino disagrees. The second concerns sanctions Enforcement insists that a bar should be imposed for each cause of action. Vedovino demurs, claiming his circumstances should be considered as substantially mitigating. These are the two issues on which the hearing and briefs filed by the parties focused, and that the Hearing Panel confronted in its deliberations. After carefully considering the testimony, evidence, arguments of the parties and relevant legal precedents, we resolve both issues against Vedovino, for the reasons stated below.
Following hearings on the above charges, an OHO Panel found that Enforcement had carried its burden of proof and as set forth in the 2018 OHO Decision:
For converting funds, in violation of FINRA Rule 2010, Respondent John Anthony Vedovino is barred from associating in any capacity with any FINRA member firm. He is also barred from associating with any FINRA member firm in any capacity for his failure to testify and to comply substantially and promptly with requests to produce records, in violation of FINRA Rules 8210 and 2010. Vedovino is ordered to pay hearing costs in the amount of $2,885.16, which includes an administrative fee of $750 and hearing transcript costs of $2,135.16.
2019 FINRA NAC Decision
In the Matter of Department of Enforcement, Complainant, vs. John Anthony Vedovino, Respondent (FINRA National Adjudicatory Counsel Decision; Complaint No. 2015048362402 / May 15, 2019)
As noted in the NAC Decision [Ed: footnotes omitted]:
While working at WFA, Vedovino maintained personal Wells Fargo employee or "team member" checking and credit card accounts with WFA's affiliated bank, Wells Fargo Bank. Vedovino opened the accounts in May 2014 when he began working at WFA. The "team member" status afforded Vedovino certain benefits at Wells Fargo Bank, including the waiver of certain fees customarily charged to account holders.'
From April 16 to October 16, 2015, while associated with WFA, Vedovino used the debit and credit cards associated with his Wells Fargo Bank accounts to withdraw cash at ATMs and make purchases on 19 occasions. After these transactions, Vedovino called Wells Fargo Bank and falsely reported that he was the victim of fraud because someone had made unauthorized transactions on his account.Based on these false claims, Wells Fargo Bank reimbursed Vedovino for 18 of the 19 transactions, crediting his account with $3,391.98.
During Wells Fargo's internal investigation of the above transactions, Vedovino was interviewed, and, as explained in part in the NAC Decision:
[I]nitially, Vedovino denied that he made the suspect transactions, claiming that the transactions were fraudulent and that a drug-addicted friend who had been stealing from him was responsible. Vedovino's supervisor told Vedovino that it was not possible for this friend to have made the transactions because he died prior to the transactions at issue. When PM confronted Vedovino with photographic evidence, and noted that Vedovino was wearing the same bracelet at the interview as in the photograph from the ATM security cameras, Vedovino confessed that he had used his debit card and credit card on those occasions. According to PM, a pattern repeated throughout the interview in which Vedovino would initially deny he made a specific false claim and, after PM explained the evidence against him, then he would acknowledge his wrongdoing.
. . .
Vedovino did not disclose during his interview or in his handwritten statement that he had become addicted to drugs in 2014 and, during the months he made the false reimbursement claims, was chronically abusing opioids.6 Shortly after his termination from WFA, in January 2016, Vedovino entered an outpatient rehabilitation program, which he successfully completed in November 2016. Vedovino lived with his parents while he worked at WFA and throughout his participation in the outpatient rehabilitation program. He later moved to Colorado by himself in January 2017.
Footnote 6: In fact, Vedovino testified at the hearing that he was under the influence of opioids during his interview with PM and when he wrote his handwritten statement that same day. According to Vedovino, prior to his interview, he had successfully pitched to a potential client offsite and used drugs on his way back to the office.
. . .
Footnote 23: It is undisputed that Vedovino suffered from a serious opioid addiction during the period he submitted the false reimbursement claims to Wells Fargo Bank. Among other things, Vedovino testified that he used the subject cash withdrawals to purchase drugs and that he was under the influence of drugs during his interview with PM and his supervisor.
. . .
Footnote 27: Enforcement's counsel averred that Enforcement did not learn until the hearing that Vedovino used the cash from the underlying ATM transactions to buy drugs or that his father allegedly shielded him from the specifics of FINRA's requests.
As to Vedovino's alleged violations of FINRA Rule 8210 attendant to his failure to respond to requests for testimony and production of information, the NAC Decision states in part that:
[V]edovino testified that he spoke to one of the attorneys once or twice in early 2016 after his termination, but that was the only time he spoke to either attorney. Vedovino did not present any testimony from the attorneys to whom the letters were addressed. According to Vedovino, his father was "handling the FINRA investigation" and Vedovino "didn't have a choice . . . [his] father took the reins, and that was it" because Vedovino's father wanted Vedovino to focus on getting sober. Vedovino further testified that, even if he had wanted to appear at the OTR, his father would not have permitted it. Vedovino's father did not testify at the hearing.
In a cogent 15-page Decision, the NAC affirmed the OHO Decision and imposition of Bars.
Bill Singer's Comment:
Given the asserted facts and alleged conduct, FINRA conducted its investigation and disciplinary proceedings in a commendable manner that furthered the self-regulator's need to protect the industry and investing public while showing some compassion for Vedovino's addiction and psychological state. Hopefully, Vedovino is in recovery and will turn his life around.
BrokeAndBroker.com Blog readers know that I am a zealous advocate for the FINRA Small Firm community and for the industry's hundreds of thousands of associated persons. As a voice for those often voiceless constituencies, I frequently criticize FINRA's dismissiveness of many issues that are relevant to those smaller firms and men and women. In trying to shed light of FINRA's lack of appropriate concern for the industry's small fry, I often launch into what I self-deprecatingly refer to as "jeremiads." In particular, I criticize FINRA's dubious efforts to produce numbingly boring video content of little use to anyone, its conduct of generic seminars, and its support for all sorts of causes that seem designed to accomplish little beyond burnishing FINRA's brand. As I often lament, FINRA tends to be an organization adept at "hearing" what its critics say but never quite managing to "listen." After writing about Vedovino and giving the self-regulatory-organization its due, I entered a simple search on FINRA.org: "Opioids Drugs Addiction". The only hits were to the two Vedovino OHO and NAC cases.
That's not enough. How about you set up some page where you provide associated persons or member firms with useful information and links about treatment options. Also, perhaps FINRA could set up a CONFIDENTIAL and anonymous help-line for associated person struggling with addiction?