Initiated By
FINRA
Allegations
Johnson was named a respondent in a FINRA complaint alleging that he converted his member firm's funds by transferring $1,059,544.98 from his firm account to his personal bank account for his own use and benefit, when he knew he had received the funds in error and that he had no right to possess the funds. The complaint alleges that Johnson's firm deposited the funds into his brokerage account at the firm following the firm's liquidation of his shares and warrants of Doosan Heavy Industries & Construction Co. ("Doosan"), a South Korean company. Due to a system error, the firm incorrectly priced Johnson's Doosan holdings in South Korean Won instead of in U.S. Dollars. As a result, Johnson received $1,059,544.98 from the sale of his Doosan securities, when he should have received only $951.01. Because Johnson monitored his account with the firm on a daily basis, he knew the actual value of his Doosan holdings and that he had received the $1,059,544.98 in error. Rather than notify the firm of the error, Johnson wrote a check made payable to himself for $1,059,544.98 and drawn on his firm account and deposited the check in his bank account that he held away from the firm. Johnson planned to distribute the after-tax proceeds to himself and his siblings. However, the firm cancelled the liquidation of Johnson's Doosan securities and rebilled the transaction at the correct selling price. When Johnson saw that the Doosan transaction had been reversed, he obtained a cashier's check for $1,060,000 from his personal bank and deposited the check into his firm account. The complaint also alleges that in both a written response to a request for information and document and an on-the-record interview, Johnson provided false and misleading information. Johnson falsely stated that, at his request, sales assistants at the firm researched the transaction and value of his Doosan stock and confirmed that the $1,059,544.98 he received from the sale of his Doosan stock and warrants was accurate.
Resolution
Decision
Bar
Bar (Permanent)
Registration Capacities Affected
All capacities
Duration
Indefinite
Start Date
10/6/2021
Sanctions
Monetary Penalty other than Fines
Amount
$4,778.60
Regulator Statement
Hearing Panel decision rendered August 23, 2019. The sanctions are based on findings that Johnson converted $1,059,544.98 from his member firm after the firm incorrectly priced sales of his holdings in a South Korean company whose securities trade on the Korean stock exchange. The findings stated that the firm incorrectly priced the sales in U.S. dollars instead of South Korean won. Because of a system error, Johnson received $1,059,544.98 in his firm securities account from the sales, but he was entitled to less than $1,000. After the firm's error, Johnson moved the money to a personal bank account. Johnson later returned the funds to his firm account when he saw that the firm had corrected its error and reversed the credit, causing the account to have a negative balance. The findings also stated that the Panel finds that FINRA failed to present sufficient evidence to conclude that Johnson provided false or misleading information during the investigation. The Panel therefore dismisses cause two of the Complaint. On August 28, 2019, Johnson appealed the decision to the NAC. The sanctions are not in effect pending the review.
Amended NAC decision rendered October 6, 2021 wherein the NAC affirmed the findings and sanctions made by the hearing panel.
On November 2, 2021, Johnson appealed the decision to the SEC. The sanctions except for the Bar are not in effect pending the review. The bar remains in effect.
SEC decision rendered February 23, 2024 wherein the findings and the sanctions imposed by the NAC are sustained. The decision became final April 23, 2024.
