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NEWSLETTERS & ALERTS
Young Broker Dooms Career by Violating Bank Secrecy Act
by Howard Haykin
Matthew Carvell agreed to a $5K fine and a one-year suspension to settle FINRA charges that he intentionally structured cash deposits in increments of less than $10,000 to avoid federal reporting requirements.
BACKGROUND. Carvell, a resident of Middle Island, NY, was associated with People’s Securities as a General Securities Representative from August 2014 to October 2015. During the period, 2012 through 2015, he also worked as a branch office manager at 2 separate branches of a People’s Securities affiliate bank in Bridgeport, CT.
Carvell, who was permitted to resign from the broker-dealer, provided the following explanation for committing the violations addressed in this case:
“He had been keeping assets at his home residence to protect them from ‘private loan repayment garnishment as a result of my wife's student debt.’ He deposited this money into his accounts at People's United Bank. According to his statement regarding his acts 'I did not attempt to structure deposits to avoid disclosing my cash position from the government, nor was that my intention. I simply wanted to keep a private matter private. I was unaware that in doing so I was acting in a way that would be deemed as unethical or break any bank regulations'."
FINRA FINDINGS. Over a 9-day period from 9/8/15 to 9/16/15, Carvell made 10 cash deposits totaling $50,000 into his 5 personal bank accounts at 2 separate banking entities. While each of the deposits were in amounts just under $10,000, if added together they would have exceeded $10,000.
The Bank Secrecy Act (“BSA") ... requires financial institutions to file reports of transactions in currency exceeding $10,000 in accordance with regulations established by the Secretary of the Treasury. Section 5324(a) of the BSA ... provides that no person shall, for the purpose of evading federal reporting requirements: (i) cause or attempt to cause a domestic financial institution to fail to file a required transaction report; … (iii) structure or assist in the structuring any transaction with one or more domestic financial institutions, or attempt to do so.
FINRA contends that Carvell had specific knowledge of CTR requirements – since he had received several years’ training on BSA, AML and CTR requirements. By having structured his cash deposits in his personal bank accounts in a manner designed to evade the banks’ federal reporting requirements and to prevent the filing of a CTR, Carvell violated Section 5324(a) of the BAS.
FINANCIALISH TAKE AWAYS. It’s not unusual to read a case where an associated person of a broker-dealer has unknowingly or unwittingly committed federal law violations outside of the workplace environment. Even though such individuals undergo extensive training and are subject to industry-wide regulations. Unfortunately, common sense cannot be taught.
So, what how can firms utilize such disciplinary actions to their benefit? By integrating these stories and postings into their Continuing Education sessions, as a reminder to every associated person that they will be held accountable for their professional, as well as personal, actions. Associated persons must see concrete examples of others who have thrown away their careers by getting caught violating rules or regulations.
This case was reported in FINRA Disciplinary Actions for September 2017.
For details on this case, go to ... FINRA Disciplinary Actions Online, and refer to Case #2015047508701.