A Minnesota general securities broker-dealer, in business since 1968, agreed to settle with FINRA after it failed to prevent or detect an RR from misappropriating nearly $1mn from customer accounts. Specific FINRA Findings. In this case, over a 2-year period (11/1/08 through 9/30/10) a Registered Rep with Woodbury Financial Services, whose main office is located in Oakdale, MN, converted about $990,000 from the firm’s customers, through separate wire requests.  These wire requests directed that funds be withdrawn from the customer accounts that he serviced, and wired to a bank account that he controlled. FINRA noted that the firm's supervisory control system failed in several ways:  [C-I Take Aways: Note each of Woodbury's various deficiencies, then consider how you the WSPs of your firm or client might update or strengthen its WSPs.]

• firm had no policy nor procedure that required a review of multiple wires from one or more customers that went to the same 3rd-party account.
• firm did not produce exception reports that would have identified multiple customer wires going to the same 3rd-party account.
• firm failed to detect that a single RR had submitted separate wire requests, from different firm customers, resulting in the transmittal of approximately $990,000 of those customers’ funds to a bank account that he controlled.
• firm's  supervisory system failed to adequately review and monitor all transmittals of funds from customers’ accounts to 3rd-party accounts and outside entities.

Prior Relevant Disciplinary History. Woodbury had been disciplined previously by the State of Arizona, in a matter relevant (i.e., similar ) to this case.  In May 2009, Woodbury was fined $250,000 for having failed to adequately supervise 2 of its RRs who embezzled over $2mn from firm customers. FINRA Sanctions. Woodbury Financial Services, Inc. was fined $75K.   For further details, go to:   [FINRA AWC #2010024996801].    [Disciplinary Actions for October 2011]