Associated Person Reed participated in a scheme that involved causing fraudulent checks to be issued and drawn from her member firm’s bank account. In connection with the scheme, Reed prepared fraudulent check requests and disbursed numerous checks drawn on her firm’s bank account in various amounts under $1,000 and totaling over $290,000. The checks were made payable to entities that did not provide services to her firm; this was done under the guise that the entities were firm-authorized transfer agents and the payments were for related fees.
Reed’s coworker provided her with fictitious billing invoices from such entities and, in turn, Reed initiated check requests through the firm’s computer system to pay the fictitious fees; the check requests were processed and approved, and the checks issued and delivered back to the securities processing area where she worked.
Upon receipt of the checks, Reed gave the checks to her coworker, who provided them to a third party not employed by the firm; in return for initiating and processing the fictitious check requests, Reed received periodic cash payments from her coworker, totaling an estimated $10,000, for her own personal use.
The firm became aware of this matter when the New York City Police Department contacted it regarding an individual (a non-firm employee) who was taken into custody in an unrelated matter; the individual was in possession of certain of the firm checks issued as a result of the scheme. In addition, the firm investigated the matter, including questioning Reed, who admitted that she engaged in the above-referenced conduct; the firm then terminated Reed’s employment.