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Regulatory Sanctions

While the Customer was Away, Did This Broker Play?

March 14, 2018

by Howard Haykin


A New Jersey-based registered rep ("RR") agreed to pay nearly $6K in fines, disgorgement and interest, and serve a 1-month suspension, to settle FINRA charges that he effected unauthorized trades in a customer’s account while the customer was on vacation.


FINRA FINDINGS.    In early 2016 – on February 23 and April 12 – while a customer was on vacation, the RR effected 5 unauthorized trades in that customer’s account, using the proceeds from 3 sales to purchase 2 new securities. All told, the transactions generated about $870 in commission and, as it happens, the customer’s account profited from the transactions at issue. However, because the trades were supposedly unauthorized, the RR was deemed to have violated FINRA Rule 2010.


FINANCIALISH TAKE AWAYS.    It almost seems non-sensical that this registered rep, who had been spent 13 years with Wells Fargo Clearing Services, would have risked his career over 2 sets of unauthorized transactions and $870 in commissions. That said, it's oddly coincidental that in July 2016, the registered rep settled a customer dispute over alleged "unauthorized trading, misrepresentation of commissions, unsuitable investments, and lost opportunity." 


Perhaps this customer dispute prompted FINRA to investigate this RR's activities, at which time it came across the 'unauthorized' trades. Wells Fargo never registered any complaints about the trades because it the RR continued working for the firm until September 2017. 


This case was reported in FINRA Disciplinary Actions for December 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case # #2016051573601.