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Regulatory Sanctions

Broker First Botches Customer’s Retirement Contribution, Then Screws Up Career

March 31, 2019

by Howard Haykin


Do brokers fear being fired for mistakenly depositing a customer’s retirement contribution into the wrong account? Do they fear that the customer will drop them like a ‘hot potato’? The answer to both questions, would be 'YES', many do.
But matters certainly couldn’t have ended up worse for a broker with World Capital Brokerage, who tried to hide or disguise his error by employing a string of cover-ups that ultimately unraveled and got him barred from the industry.
Perhaps firms may wish to share this case with their own registered reps, to inspire them to 'own up' to instances of negligence and seek the firm’s help or guidance in resolving self-made problems.



In April 2014 and again in April 2015, the broker mistakenly deposited a customer’s (“WW”) IRA contributions into WW's variable annuity account rather than his fixed annuity account. After the customer verbally complained about the errors [no one noticed the error in 2014?] – the broker attempted to have the deposits redirected to the proper account.


WHAT WENT WRONG.    In October 2015 and January 2016, the broker fabricated 2 letters to WW that purported to come from the annuity company. Though the status of the deposits had not been corrected, each letter stated that the incorrect deposit was re-deposited into the correct account and the transaction was not reportable to the IRS.  [Falsifying documents and making misrepresentations to customers violates FINRA Rule 2010.]


Between March 2016 and June 2016, the broker paid $15,999.55 to WW to settle his verbal complaint regarding the mistaken IRA deposits. World Capital was never notified of the complaint or the payment to the customer.  [Settling customer complaints without the employing firm’s knowledge violates FINRA Rule 2010.]


GOOD NEWS/ BAD NEWS.   The annuity company corrected the deposits. However, after the correction, WW and his wife wrote a complaint letter addressed to the broker alleging various misconduct, referencing the broker’s prior settlement with the customer, and demanding additional money.


On or about September 11, 2016, the broker altered the customers' complaint letter to remove references to his prior settlement, then sent the altered complaint letter to World Capital’s compliance department.  [Altering the customer’s letter and causing the firm to maintain inaccurate books and records violate FINRA Rules 2010 and 4511, respectively.]


In June 2018, World Capital Brokerage U5’d (terminated) the broker … supposedly after learning about new ‘incriminating’ information regarding a previously reported DRP (Disclosure Reporting Page) on the broker’s Form U4 - that pertained to 2013 and 2014 retirement account transactions, and which likely led to his 2015 FINRA sanctions.



This case was reported in FINRA Disciplinary Actions for March 2019.

For further details, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017055262601.