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Bad Brokers

Broker Fabricated Statements Used to Secure $3.2Mn in Bank Loans

November 12, 2019

by Howard Haykin



In 2010, a broker with Hilltop Securities created a false account statement for a customer, who said he needed a ‘working capital’ bank loan for his company. The broker accommodated the request by changing the name, address and account number on another customer’s statement, which showed the account holding more than $3 million in securities. The broker then gave the false account statement to the bank's loan officer. Based in part on that false statement, the bank issued a $1.872 million loan.


Because the bank required account statements each month, the broker created a false account statement every month from April 2010 until October 2016 and again from September 2018 until January 2019. For all his 'services', the broker received $50,000 from his customer.


Over the years, the bank increased its lending to the customer’s company and extended a line of credit to the company - based in part on the false account statements. However, the customer’s company ultimately defaulted on its bank loans, resulting in a loss to the bank of more than $3.2 million. In September 2019, the Financial Industry Regulatory Authority (FINRA) followed up by barring the broker from the industry - though not before he received his $50K.



[For further details, click on FINRA Case #2019061689501.]