NOTE: Stipulations of Fact and Consent to Penalty (SFC); Offers of Settlement (OS); and Letters of Acceptance Waiver, and Consent (AWC) are entered into by Respondents without admitting or denying the allegations, but consent is given to the described sanctions & to the entry of findings. Additionally, for AWCs, if FINRA has reason to believe a violation has occurred and the member or associated person does not dispute the violation, FINRA may prepare and request that the member or associated person execute a letter accepting a finding of violation, consenting to the imposition of sanctions, and agreeing to waive such member's or associated person's right to a hearing before a hearing panel, and any right of appeal to the National Adjudicatory Council, the SEC, and the courts, or to otherwise challenge the validity of the letter, if the letter is accepted. The letter shall describe the act or practice engaged in or omitted, the rule, regulation, or statutory provision violated, and the sanction or sanctions to be imposed.
Alan D. Schell 2009017694001/December 2010
Schell converted $17,410 from a bank customer by making unauthorized withdrawals from the customerís certificates of deposit (CDs). When Schell was confronted about the withdrawals, he admitted he had taken the money to fund an inner-city girlsí basketball team. Schell failed to respond to FINRA requests for information and documents.
Pepo converted approximately $12,198 of her member firmís affiliated bank funds by crediting her personal checking and savings accounts without the bankís knowledge or authorization. The funds were the amount of fees that the bank had charged Pepo for servicing her accounts and she admitted to the bank that she had granted herself ďfee waiversĒ of the bank fees. Pepo failed to appear for FINRA on-the-record interviews.
Associated Person Reed participated in a scheme that involved causing fraudulent checks to be issued and drawn from her member firmís bank account. In connection with the scheme, Reed prepared fraudulent check requests and disbursed numerous checks drawn on her firmís 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.
Reedís coworker provided her with fictitious billing invoices from such entities and, in turn, Reed initiated check requests through the firmís 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 Reedís employment.
Kenya Reed : Barred; Agreed to cooperate with FINRA in an ongoing investigation relating to this matter.
Philip Rene Deroziere (Principal) AWC/2009016976701/November 2010
Deroziere converted $10,000 from his member firm by endorsing and depositing a check made payable to the firm into his personal bank account without the firmís knowledge or permission. Deroziere also converted $750 from a nonsecurities customer by endorsing and depositing checks made payable to the customer into his personal bank account without the customerís knowledge or permission. Deroziere failed to respond to FINRA requests for information.
Hardy misappropriated approximately $8,585 from bank customersí accounts by closing their accounts and withdrawing their funds for his personal use, without their knowledge or permission. The Hardy informed the bank that he closed the accounts with the intention of opening new accounts so as to qualify for sales incentives, and maintained the customer funds in his desk at work and at his home. Hardy returned the monies to the customers whose funds he had still retained.
Cislyn Louise Beckford AWC/2009020374801/October 2010
Beckford misappropriated over $8,200 in funds belonging to her member firmís customer, from the customerís retail bank accounts, for her own personal use, resulting in her failure to observe high standards of commercial honor and just and equitable principles of trade. The retail bank reimbursed the customerís accounts for the missing funds and Beckford reimbursed the retail bank.
Andrew Charles Callihan OS/2007010731201/September 2010
Callihan withdrew, or caused the withdrawal of, a total of $19,000 from bank customersí checking or retirement accounts and deposited the funds into his securities account without the customersí knowledge and consent, and used the funds for some purpose other than the customersí benefit. Callihan failed to respond to FINRA requests for information and documents. (
Richard Joseph Stratman AWC/2009019569401/September 2010
Without permission and authority, Stratman used a customerís bank account to electronically pay his own personal bills and expenses. Stratman took specific steps to misappropriate $4,713.50 but was only successful in converting $2,717.92 because the additional disbursements were prevented when the bank stopped payment on the transactions. The bank compensated the customer and Stratman reimbursed the bank to cover the amounts the bank paid to the customer.Stratman wrongfully converted approximately $2,717.92 from the customer and attempted to wrongfully convert an additional $2,000.
Oates misappropriated $10,000 from the vault of his member firmís bank. Oates took the money from the vault without the firmís or bank branchís permission or authority. Oates did not observe high standards of commercial honor when he misappropriated funds from the branch vault.
Without bank customersí knowledge or authorization, Polage used their personal bank account information to generate and activate ATM cards linked to their savings accounts and withdrew funds totaling approximately $36,102 from the accounts. Polage has not returned any of the funds to the bank customers or reimbursed the bank after it reimbursed the funds to the customers. Polage failed to respond to FINRA requests for information.
Davis converted $69,200 of customersí funds from his member firmís active assets accounts for his personal use. Davis wrote checks made payable to the order of ďcash,Ē enabling him to withdraw funds from customersí active assets accounts, and then deposited the withdrawn funds into his personal bank account. Davis forged the customersí signatures on the checks before negotiating them.
Bronsky used the bank ID and computer of the assistant branch manager at the bank where he was employed to create an automatic teller machine (ATM) card and personal identification number (PIN) for a bank customer without the customerís knowledge. Bronsky used the ATM card and PIN to withdraw a total of $2,511 from the customerís savings account for his own use and benefit.
Hancock obtained access to funds an elderly bank customer held in one or more bank accounts and caused the withdrawal of approximately $11,320 from the accounts. Hancock obtained a portion of the funds by causing early withdrawals from a time deposit account and used the funds for his personal benefit. Hancock returned the misappropriated funds by causing the deposit of $11,320 into the accounts from which the funds were taken.
Colleen Marie McMahon-Hill 2008016040401/June 2010
McMahon-Hill applied by telephone for bank-issued credit cards in the names of bank customers, without the customersí authorization or consent, and used the cards to make unauthorized transactions totaling approximately $5,642.97.McMahon-Hill acknowledged that she used the cards without the customersí permission and did not reimburse the bank for its losses. McMahon-Hill failed to provide FINRA with requested information.
Ray misappropriated approximately $368,657 from customers by opening bank accounts, for which he was the signatory, in firm customersí names. Through false representations, including false letters of authorization, Ray, without the customersí knowledge or consent, wired funds from the customersí firm accounts into the bank accounts that he had opened and used the funds for his personal use.
Without a bank customerís knowledge or authorization, Barrett
signed the customerís name on a check withdrawal form requesting a $25,000 check from the customerís account made payable to Barrettís friend, and the funds were later deposited into the friendís checking account; and
activated and linked an ATM card to the bank customerís savings account and used the card to withdraw $3,500 from the account for his own personal use and benefit.
Barrett failed to respond to FINRA requests for information and to appear and testify at an on-the-record interview.
McEwen converted $32,528.56 from a customer by falsely informing her that a check McEwenís member firm sent to her pursuant to a consent order with the Missouri Securities Division for unsuitable variable annuity sales to the elderly was sent to her by mistake and actually represented commissions the firm owed him. McEwen instructed the customer to deposit the check into her bank account and then make a check payable to him in the same amount; after the customer followed these instructions, McEwen cashed the check and deposited the funds into his personal bank account. McEwen converted an additional $11,000 from the customer by depositing checks intended for investment into his personal bank account and failed to purchase investments on the customerís behalf.
McEwen failed to appear for FINRA on-the-record testimony.
Maser liquidated funds in the customersí securities accounts with the customersí understanding that he would use the funds to purchase fixed annuities on their behalf. Without the customersí knowledge, permission or authority, Maser deposited the funds into bank accounts he opened in each of their names. He created passwords for the accounts which he used to instruct the bank to issue a $23,800 check payable to himself at his home address and to have the bank make monthly payments to each of the customers that were equivalent to the payments they would have received had he purchased the annuities for them.
Pena knowingly submitted false documentation to his member firmís affiliate bank in order to open customer accounts, thereby circumventing the bankís requirement that its customers provide written verification of residential address. The customers were non-U.S. citizens and, without written verification of address, the bank would not have opened accounts for these customers. Penaís tax accountant, who he had a referral relationship with, created false address verification letters for the customers on her companyís letterhead upon Penaís request, and provided the letters to Pena, who used these letters to open bank accounts for the customers and received at least $800 in commissions. Pena was responsible for ensuring that accurate documentation was presented to his employer and intentionally presented the false address verification letters to his employer in an attempt to avoid supervisory guidelines.
Meyer withdrew approximately $553,000 from a customerís bank account by presenting withdrawal slips to bank tellers on which he wrote ďat the customerís requestĒ and deposited the funds into his personal brokerage account for his own use. In addition, Meyer misappropriated approximately $85,000 from another bank customer by depositing the proceeds of the sale of the customerís annuity into his personal accounts for his own use. Meyer exercised discretionary authority over a customerís securities account without her written authorization, did not speak with the customer in connection with every transaction, and did not obtain approval from his member firm to engage in discretionary trading. Meyer engaged in private securities transactions, for compensation, without prior written notice to, or prior written approval from, his member firm. The findings also included that Meyer failed to respond to FINRA requests for information and to appear for a FINRA on-the-record interview.
Potts used her access as a private banking associate to embezzle approximately $1,452,158 from customersí checking and certificate of deposit (CD) accounts. Potts fraudulently completed debit tickets, ranging from $800 to $68,000, to withdraw funds from customersí checking and CD accounts, falsely indicating that the customers requested the withdrawal: The customers neither authorized nor had knowledge of the withdrawals. Potts presented the debit tickets to bank tellers at her local bank branch and received cash back, which she used for her own personal use.
In order to receive employee credit, Garcia completed and submitted false documents to enroll his member firm bankís customers in an online bill payment program without their authorization. Garcia failed to respond to FINRA requests for information.
Fox improperly refunded a member firmís bank affiliate service fees to customer bank accounts where such fees were never actually charged, and converted at least $52,000 of the refunded fees after first moving them to other bank accounts. The converted monies were repaid.
While employed as a personal banker at her member firmís affiliate bank, Katz improperly obtained an automatic teller machine (ATM) card for a customerís account without authorization and misappropriated approximately $100,000 from the customerís account.
Thomas H. Collop Jr. AWC/2008016441801/February 2010
In his capacity as a bank employee, Collop converted a total of approximately $10,900 in bank funds by removing money from his cash box without the authority to do so. Collop processed a false buy/sell transaction in the bankís teller system in an effort to conceal that he had taken bank funds.
In a recent FINRA regulatory settlement, a Barclays research analyst got a job offer from an issuer he was covering. FINRA makes the case that the job offer posed a conflict and should have been disclosed to the employer. Fair enough -- I agree; however, when considering FINRA's charges against the analyst, I was reminded of a similar scenario involving... Read On