Someone lost about $100 from a Bank of America drive-up ATM. Someone found it. That first finder wasn't a keeper. That first finder gave the $100 to a BOA employee, who apparently misplaced the cash in his jacket for a week. At some point, having "found" the "lost" cash in his jacket, the BOA employee decided that finders keepers, losers weepers was the way things would go down, and he kept the cash. FINRA was not amused. Not by a long shot.
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, Michael Nagy submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Michael Nagy, Respondent (FINRA AWC 2019064958901)
The AWC alleges that Michael Nagy was first registered in 2017 with FINRA member firm "Merrill Lynch, Price [sic], Fenner & Smith, Inc." (Ed: misspelling of "Pierce" as "Price" is in the "Background" section of FINRA's AWC]. The AWC asserts that Nagy "has no relevant disciplinary history." The AWC notes that Nagy "registered as a general securities representative and also became employed by the firm's bank affiliate later that year."
Merrill Lynch's bank affiliate?
Oh my, I wonder which bank that "bank affiliate" could possibly be?
Lemme see here -- we got Merrill Lynch, Price . . . oh, yeah, that's Peirce, and it has an affiliated bank. Wow, that's like, what, a state secret of epic proportions?
Bill Singer's Snarky Shot Masquerading As A Comment: Seriously? FINRA not only misspells "Pierce" as "Price" but Wall Street's august self-regulatory-organization won't even mention the name of the member firm's parent company -- particularly when that parent is a bank and that bank is at the heart of the regulatory matter at issue? It's a Bank of America ATM -- not a Merrill Lynch ATM. Even more idiotic, FINRA often discloses the Bank of America relationship with Merrill Lynch, Pierce, Fenner & Smith, Inc. in other AWCs, For example, under the "Background" section of this 2020 AWC we have a full recitation of Merrill Lynch's and Bank of America's relationship: https://www.finra.org/sites/default/files/fda_documents/2018058319801
Merrill Lynch is a full-service broker-dealer with more than 30,000 registered individuals and more than 3,700 branches. The Firm has been a FINRA member since 1937. Merrill Lynch was acquired by Bank of America Corporation in January 2009, and it remains a fully-owned, indirect subsidiary today. The Firm is one of Bank of America's two principal United States broker-dealer subsidiaries
The Lunch Break That Broke A Career
As alleged in part in the AWC:
In November 2019, Nagy worked at a branch of a Merrill Lynch affiliated bank. On
November 8, while on his lunch break, a customer gave Nagy at least $100 in cash that a
previous customer using the bank's drive-up ATM had left behind, and asked Nagy to
track down the previous customer and return the funds. After returning to the bank
following his lunch break, the bank manager asked Nagy about the cash left behind in the
ATM but Nagy disclaimed any knowledge of the missing funds. The following week,
Nagy found the cash in his suit jacket pocket and decided to keep the cash indefinitely
rather than report it at that time.
FINRA deemed Nagy's cited conduct to constitute a violation of FINRA Rule 2010, and in accordance with the terms of the AWC, the self regulator imposed upon Nagy a Bar from associating with any FINRA member in all capacities.
Bill Singer's Comment
FINRA found that Nagy's conduct amounted to an act of "conversion," which the AWC characterizes as follows:
[C]onversion is an intentional and unauthorized taking of and/or exercise of
ownership over property by one who neither owns the property nor is entitled to possess
it. Conversion violates FINRA Rule 2010 even if the conversion occurs outside the scope
of an associated person's employment with a FINRA member or even if the person from
whom the funds are converted is not a customer of the firm with which the respondent
Drive Up? Drive By? Drive In? Drive Through?
How does an ATM customer leave behind about $100 in cash that was withdrawn from a drive-up ATM? For starters, does the AWC literally mean a "drive-up" ATM? Or did the customer use a drive through ATM -- or did the customer drive up to an ATM, get out of his car, and then use the machine? As you can tell, I'm a curious fellow. If FINRA really, truly means a drive-up ATM, then here's a video of how it works:
The Leave-Behind Conundrum
How do you "leave behind" $100 from a drive-up ATM? Seriously -- think about it. Maybe the driver dropped it and didn't realize it? Maybe the machine malfunctioned, the driver pulled away angry, and after the customer drove away without his cash, the ATM spit out $100 in cash, which stuck in the tray or fell onto the pavement? Be that as it may, according to the AWC, someone found the $100 and gave it to Nagy, and asked him (a BOA employee) to do the right thing and return it. The guy who found the cash and handed it to Nagy was a good Samaritan. Nagy -- not so much. Nagy loses even more points after his manager asked about the cash and he pretended not to know about it.
Did It Suit Him?
Where I get lost again is with this assertion in the AWC: "The following week, Nagy found the cash in his suit jacket pocket and decided to keep the cash indefinitely rather than report it at that time." Hey -- don't get all pissy with me, I didn't write that, FINRA did. Look it up in the AWC. What does FINRA mean that "Nagy found the cash in his suit jacket pocket?" Did the good Samaritan put it there without telling Nagy? Did Nagy forget he had about $100 in his jacket for over a week? Would FINRA has dropped the Bar if after the passage of an indefinite period of time, Nagy handed the cash over to his manager?
Finders Keepers Losers Weepers
In the end, someone seems to have lost about $100 from a Bank of America drive-up ATM. Someone found it. That first finder wasn't a keeper. That first finder gave the $100 to a BOA employee, who apparently misplaced the cash in his jacket for a week. At some point, having "found" the "lost" cash in his jacket, Nagy decided that finders keepers, losers weepers was the way things would go down, and he kept the cash.
Should Nagy be barred for that? I ain't shedding any tears for him but before you're so quick to approve of the sanction, when were you going to tell your employer about the pack of notepaper you took from work for your kid, or that box of pens that found its way into your bag? If conversion is conversion, then don't be so quick to point a finger at Nagy.
One final thought -- how do we reconcile everything that fell upon Nagy with the recent federal court decision that refused to return to Citigroup hundreds of millions of dollars mistakenly wired out to a number of asset managers? See, "Citigroup cannot recoup Revlon payouts after nearly $900 million gaffe: U.S. judge" (Reuters / February 16, 2021) https://www.reuters.com/article/us-citigroup-revlon-lawsuit/citigroup-cannot-recoup-revlon-payouts-after-nearly-900-million-gaffe-u-s-judge-idUSKBN2AG1TJ
In the Citigroup case, that bank meant to wire a $7.8 million interest payment on behalf of Revlon but, as a result of human error, wired $893 million to the cosmetic company's lenders. Upon trying to reclaim the hundreds of millions in mistakenly wired funds, ten asset managers refused to return some $501 million claiming that it constituted a pre-payment of an outstanding loan owed to them by Revlon. The United States District Court for the Southern District Court essentially approved this oddball version of "finders keepers, losers weepers," which you can read in all its glory in a 105 page Findings of Fact and Conclusions of Law
Sometimes life and Wall Street regulation ain't fair. Not everyone is punished equally or at all. Nagy is handed $100 by someone who found it near a Bank of America ATM. Nagy pockets the cash. FINRA bars him from the securities industry. Ten asset managers received $501 million in erroneously wired funds from Citigroup and a federal court says, hey, that's on Citigroup.