RRBDlaw.com: New FINRA Cases Online With Analysis by Bill Singer

September 24, 2010




Regulatory lawyer Bill Singer has analyzed and posted the latest crop of FINRA disciplinary cases

  • One enterprising industry Principal falsified journal requests for customers' accounts without their knowledge or authorization and then submitted the falsified journal requests to his member firm as authentic. This subterfuge caused securities to be journaled from the customer accounts to his personal account. This scamster then sold the securities that had been falsely journaled to his account and converted the proceeds. The truly breathtaking aspect of this case is that the amount of the converted proceeds was $1,054,440.97.
    READ HERE at
  • Then there was the unfortunate story of the FINRA member firm that engaged a third-party vendor to preserve its electronic communications, but the vendor did not properly retain them and ultimately purged virtually all of the electronic communications it had initially captured for the firm. FINRA did not look upon the victimized member with much compassion. 
    READ HERE at
  • This one is a bit of an oddball. You understand FINRA's point but you worry whether the precedent will prove troubling. A broker used a a firm-approved presentation during retail seminars with customers -- unfortunately, FINRA determined that the presentation contained misleading, exaggerated and unwarranted statements. Subsequently, the firm received a Letter of Caution from FINRA regarding the presentation.  Notwithstanding, the broker joins a new firm and proposes to use his former firm's non-compliant presentation, albeit in modified form. As you likely suspect, this doesn't turn out particularly well. 
    READ HERE at  
  • Although this con artist did not have authority or approval to sign or issue Letters of Credit,  he still went ahead and signed a Letter of Credit on the letterhead of the firm's predecessor in the amount of $55,000 and gave it to a customer without the firm's knowledge or authorization. Not feeling too intimidated, he then signed another Letter of Credit on the firm's letterhead in the amount of $75,000 and gave it to the customer without the firm's knowledge or authorization. The beneficiaries of these Letters of Credit presented them to a bank, an affiliate of the firm, for payment. Uh oh!!!
    READ HERE at
  • Acting with others, a fraudster participated in a fraudulent scheme to solicit investments in an unregistered hedge fund and its general partner, all of which was furthered by a variety of fraudulent and deceptive sales practices.  Seems that the hedge fund was engaging in a highly speculative trading strategy involving futures contracts and there was this nasty pending Commodity Futures Trading Commission (CFTC) fraud action against the hedge fund manager.
    READ HERE at 
  • One enterprising individual misappropriated member firm funds by using expense reimbursements for personal expenses, charging personal expenses to her corporate credit card and failing to pay the bills on the card. The employee's firm had previously sent her a memorandum about deficient and late payments on her corporate credit card, reminding her that she had agreed to use the card only for corporate expenses and to pay the balance in full each month. 
    READ HERE at
  • It is with great sadness that I inform you about the registered representative for several burial associations for which the investment objectives were income and the risk factors were conservative, investment-grade or moderate. I come here today not to praise this broker, who engaged in unsuitable and excessive trading in the accounts, resulting in significant commissions for him and losses for the customers. On the other hand, you really have to read my riff on this case -- you know me, I just couldn't resist taking some funny shots.
    READ HERE at
  • What can I say about the talented gent who falsified a client's insurance policy application and related documents without the client's knowledge, submitted the documents to his member firm's insurance company affiliate and subsequently denied to his firm that he had falsified signatures or submitted falsely signed documents. Flush with his exploits, this character then took an online computer examination on his office manager's behalf that his firm's insurance company affiliate required, and falsely denied to his firm that he did so. He also denied in writing and during sworn testimony to FINRA that he took any test posing as his office manager.
    READ HERE at
  • The way FINRA called it, a registered person misappropriated $10,000 from the vault of his member firm's bank. You really should read my pithy diatribe about this seemingly innocuous case.
    READ HERE at 




In exchange for a fee, CallService provided the services of English- and German-speaking individuals to persons who had stolen account and biographical information. The identity thief would provide to CallService the name of the bank to be contacted; the stolen account information and biographical information; and instructions from the identity thief as to what to say or how the fraudulent transaction was to be conducted. Thereafter, appropriate individual employed by CallService -- namely someone who was the same gender and spoke the same language as the authorized account holder -- would pose as the authorized account holders and would then telephone financial institutions and other businesses in order to conduct or confirm fraudulent account activity on behalf of the identity thieves. If successful, the CallService employees would successfully confirm unauthorized withdrawals or transfers from bank accounts, unblock accounts, change the address or phone number associated with an account, and engage in other fraudulent activity.