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NEWSLETTERS & ALERTS
A Broker Ran ‘Out of Lives’ at His Broker-Dealer
by Howard Haykin
Michael Amundson agreed to a $5K fine and a 10-day suspension to settle FINRA charges that he effected a transaction for a customer without contacting the customer first, and without the customer’s authorization.
BACKGROUND. Amundson, a resident of Fargo, ND, has 16 years’ experience with 4 firms. From May 2008 to August 2016, he was associated with RBC Capital Markets. Following his termination from RBC, Amundson, joined up with Wells Fargo Clearing Services. Amundson holds the Series 7 license and had no prior regulatory disclosures.
FINRA FINDINGS. In June 2016, one of Amundson s brokerage customer had insufficient funds in his account to cover a scheduled $700 monthly ACH distribution. To generate funds to cover that distribution, Amundson sold $665.84 worth of shares in a mutual fund in that customer’s brokerage account without first contacting the customer prior to selling the position. Amundson also did not receive implied or express authorization from RH to sell the position.
Apparently this was not the first time that Amundson executed an unauthorized transaction in this customer’s account. According to FINRA, RBC had specifically instructed Amundson on several occasions to review the Firm's trade authorization procedures which prohibited brokers from executing transactions in non-discretionary accounts without prior customer approval.
FINANCIALISH TAKE AWAYS. FINRA’s minimal sanctions reflects the fact that Amundson’s “crime” involved executing a single transaction without discretionary authority. Yet, the key to this case is in the prior paragraph, where FINRA noted that Amundson had been forewarned by RBC about executing transactions without prior customer approval. For whatever reason, those warnings either did not register with this broker, or he chose to disregard the serious nature of his transgressions.
While we can’t get a good read into Amundson’s thinking from FINRA’s case discussion, we can take away one lesson. When providing critical feedback to any associated person – registered or unregistered – it’s helpful to communicate the consequences of similar instances of noncompliance in the future. In Mr. Amundson’s case, he needed to know that his next transgression would mean termination.
This case was reported in FINRA Disciplinary Actions for October 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2016051091101.