Massachusetts Securities Division

FINRA instituted a regulatory action against Hackley for unwittingly enabling the fraudulent transfer of funds out of a customer's account on several occasions by an imposter when he had failed to follow proper procedures to confirm the customer's intentions. SFSI was not a party to or a subject of the FINRA action. Hackley falsely attested to SFSI that he had confirmed the customer's intention to transfer funds out of the customer's account. SFSI determined that that the requests were fraudulent and reimbursed the customer the full amount that the imposter had succeeded in transferring out of the customer's account. On January 31, 2017, FINRA and Hackley entered into an Acceptance, Waiver & Consent to resolve this matter. This resulted in a suspension for Hackley from association with any FINRA member in any and all capacities for ten (10) business days. Mass. Gen. Laws ch. 110 A, § 204(a)(2)(F)(ii) provides that the Division may revoke or suspend Hackley's BD agent registration based on the above-mentioned FINRA suspension. The above-stated disclosure incidents against Hackley have moved the Division to place conditions on his registrations as a BD agent of SFSI in Massachusetts.

Consent

Undertaking

For a period of two (2) years from the date of entry of the Order, Hackley's registration shall be subject to conditions.

FINRA

Without admitting or denying the findings, Hackley consented to the sanction and to the entry of findings that he falsely attested to his member firm that he had confirmed a customer's intention to transfer funds out of the customer's account, when in fact, an imposter had requested the transfers and Hackley through his false attestations, unwittingly enabled the fraudulent transfers. The findings stated that Hackley received an email from a customer, requesting that "around $40k" be transferred from the customer's firm account to an outside bank account. Hackley forwarded the email to a registered sales assistant, to facilitate the request. Unbeknownst to Hackley, the registered sales assistant, or anyone else at the firm, the request came from an imposter who had hacked the customer's email account. The findings also stated that the registered sales assistant provided Hackley with an Outgoing Wire form, which the imposter had completed, for his signature. Hackley signed the form, after which the firm transferred $37,000 out of the customer's account. The findings also included that by signing the Outgoing Wire form, Hackley attested that he had confirmed the customer's intention to transfer funds by placing an outbound call to the customer's phone. In fact, he had neither telephoned nor otherwise attempted to contact the customer about the request to transfer funds. FINRA found that Hackley provided a second false attestation on an Outgoing Wire form, this time enabling a fraudulent transfer of $60,000. (In the interim, the office processed another request while Hackley was out of the office, resulting in a fraudulent transfer of $50,000.) FINRA also found that when the imposter made a fourth request to transfer funds, Hackley and the registered sales assistant became suspicious that the requests were illegitimate and contacted the firm's compliance department. The firm subsequently investigated, determined that the requests were fraudulent, and reimbursed the customer the full $147,000 that the imposter had succeeded in transferring out of the customer's account.

Acceptance, Waiver & Consent(AWC)

Suspension

any capacity

10 business days

2/21/2017

3/6/2017

In determining the sanction, FINRA considered the fact that Hackley's firm separately suspended and fined Hackley for the same conduct.