BROWSE BY TOPIC
- Bad Brokers
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Regulatory Sanctions
- Big Banks
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
‘White Lie’ About Customer Loan Ends a Broker’s Career
by Howard Haykin
Katherine White was issued a $10K fine and a 6-month suspension by FINRA’s Office of Hearing Officers (OHO) based upon FINRA charges that she had borrowed money from a customer without notifying or obtaining written pre-approval from her member firm.
BACKGROUND. White, a resident of Athens, IL, entered the securities industry in 1992 and by 1995 had pass the Series 7 and two principal exams - Series 24 and Series 27. She was associated with U.S. Bancorp Investments from 2001 until April 2015. The firm U5’d Ms. White on 5/21/2015, noting that she “was terminated after firm obtained information providing a reasonable basis to believe she had taken a loan from a customer." Ms. White is no longer registered with any member firm – although, according to CRD records, she is still employed by U.S. Bancorp Investments. (Perhaps in a compliance or financial record-keeping position).
FINRA FINDINGS. In October 2014, Ms. White told one of her customers that she was "in a pinch" due to unexpected dental expenses and property taxes, and expressed hope that the customer could "do [her] a favor" and lend her $10,000. The customer agreed and withdrew from his bank account a $10,000 cashier’s check payable to White. She immediately endorsed the check and had the bank teller issue 2 new cashier's checks in amounts due for her property taxes and deposited the remaining $2,784.36 into her personal bank account.
In the following 6 months, Ms. White made $10,600 in payments to the customer. Throughout that period – from 10/14/14 to 4/30/15 – Ms. White was aware that she was acting in violation of firm policies, which prohibited the borrowing of money from non-familial firm customers.
When U.S. Bancorp found out about the loan and confronted her, Ms. White took the position that the $10,000 was not a loan, but the purchase price for the sale of her tractor to the customer, and she paid $10,600 to buy the tractor back from the customer.
FINANCIALISH TAKE AWAY. OUCH!!! One can appreciate why Ms. White tried to defend her “tractor repo agreement,” but her employer was already aware of the transaction – how? we do not know. So it would seem that “discretion was the better part of valor” and Ms. White should have ‘fessed up at that point. [Again, easier said than done.]
While a $10K fine and 6-month suspension are awfully steep sanctions for someone who “honorably repaid a loan,” FINRA seemed to have little or no alternatives after Ms. White’s “white lie.”
This case was reported in FINRA Disciplinary Actions for July 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2015045601401.