With surprising regularity, we have reported about families with a stockbroker, and how such a relationship proves fertile ground for over-reaching or fraud. In a recent FINRA regulatory settlement, we come across the scenario of a mother with an Edward Jones account and her daughter who is not a stockbroker but who is an Edward Jones Branch Office Administrator. Astute readers will likely infer that since this blog is about a "FINRA regulatory settlement" that the daughter took improper advantage of the mother.
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, Tonia Berg submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Tonia Berg, Respondent (FINRA AWC 2021069510901)
Q5: Which firm personnel are required to be fingerprinted?
A5: Pursuant to Section 17(f)(2) of the Securities Exchange Act of 1934 and Rule 17f-2 thereunder, the SEC requires firms to submit fingerprints for all partners, directors, officers and employees, unless they are exempt under those same provisions. Rule 17f-2 exempts employees from fingerprinting who do not:
Regularly have access to the keeping, handling, or processing of securities, monies, or the original books and records relating to the securities or monies; and
Have direct supervisory responsibility over those who sell securities or have access to securities, monies, or the original books and records.
NRF person Tonia Berg served as a Branch Office Administrator at Edward Jones, where her responsibilities included opening customer accounts, scheduling client appointments, and entering customer buy orders. The AWC asserts that Berg "has no relevant disciplinary history."
January 2020: Wires from Mom's Account
The AWC alleges that in January 2020, Berg wired about $9,200 from her mother's Edward Jones brokerage account to a third-party's bank account -- and that said transaction was undertaken by Berg without her mother's knowledge or consent.
March 2020: Wires and Forgeries
The AWC further alleges that in March 2020, Berg sold about $35,00 in securities from her mother's retirement account, transferred the proceeds to her mother's brokerage account, and, thereafter, wired those proceeds in two transfers to a third-party's bank account -- again without her mother's authorization or consent. Finally, the AWC alleges that in order to effectuate the March wires, Berg forged her mother's signature on two Client Authorization forms -- without her mother's knowledge or consent.
January 2021: Termination
On January 8, 2021, Edward Jones filed an NRF amendment terminating Berg's employment on December 30, 2020. Thereafter, on January 28, 2021, Edward Jones filed a Rule 4530(a) filing with FINRA, disclosing the transactions at issue.
FINRA deemed Berg's cited conduct as violations of FINRA Rules 2150(a) and 2010; and in accordance with the terms of the AWC, the self-regulatory-organization imposed upon Berg a Bar from associating with any FINRA member in all capacities.
Bill Singer's Comment
I'm a bit of a stickler for consistency when it comes to regulatory documents. In the Berg AWC, I am a bit puzzled as to FINRA's distinction among the:
January 2020 wiring, which is characterized as having been done "without her mother's knowledge or consent;"
March 2020 transfers/wires, which are characterized as having been done "without her mother's authorization or consent;" and
Forging of her mother's signature, which is characterized as having been done "without her mother's knowledge or consent."
What is the difference between Berg's actions that were done without her mother's "knowledge" versus without her mother's "authorization?" There is, in fact, a difference -- as in I can be aware that you're doing something (hence, have "knowledge of what you're doing") but not consent to the act. On the other hand, I'm not quite sure what exactly means by characterizing the March 2020 wire as having been done without the mother's "authorization," whereas the January 2020 wiring and the March 2020 forgery were both done without the mother's "knowledge." Is FINRA alleging that the mother knew that Berg was engaging in the March 2020 transfers but, notwithstanding, didn't consent?