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Regulatory Sanctions

Illegally Converting Customer’s Funds - A More Conventional Way

June 19, 2018

by Howard Haykin


A Virginia-based broker with OneAmerica Securities was barred from the industry for misusing and converting a customer’s funds without her knowledge or authorization.


FINRA FINDINGS.    The broker, with 3 years’ experience for 2 firms, convinced a firm customer to liquidate her IRA held at another financial institution and invest the proceeds with him. The customer followed the broker’s recommendations and endorsed the proceeds check from the liquidated retirement account – $2,629 - to the broker for deposit into her firm account.


Yet, instead of depositing the customer’s check, the broker endorsed the check to himself and deposited it into his personal bank account. He then used the converted proceeds on personal expenses, including credit card bills, dining at restaurants and convenience store purchases.


Months later, the customer discovered that her funds had not been deposited into her firm account. The broker repaid the funds he had converted, but it was too late – the broker had violated FINRA Rule 2150(a) and his career was over – for just a shade over $2,600.


Conversion of customer funds violates FINRA Rule 2150(a), which prohibits persons associated with a FINRA regulated broker-dealer from making "improper use" of a customer's funds.


NOTE:  For a less conventional way of converting customer funds, click on ... Uh, That’s My Account, Dude!


This case was reported in FINRA Disciplinary Actions for June 2018.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2017056563301.