Initiated By
FINRA
Allegations
WITHOUT ADMITTING OR DENYING THE FINDINGS, SMITH CONSENTED TO THE SANCTIONS AND TO THE ENTRY OF FINDINGS THAT SHE SUPPLIED FALSE INFORMATION REGARDING THE REASONS FOR WIRE TRANSFER REQUESTS ON HER MEMBER FIRM'S WIRE TRANSFER REQUEST FORMS, AND CAUSED THE FIRM TO MAINTAIN FALSE BOOKS AND RECORDS CONCERNING THESE WIRE TRANSFER REQUESTS. THE FINDINGS STATED THAT AN IMPOSTER POSING AS A FIRM CUSTOMER, SENT EMAILS TO SMITH, THE CUSTOMER'S BROKER, REQUESTING THREE WIRE TRANSFERS, TOTALING $92,000, FROM THE CUSTOMER'S ACCOUNT TO A THIRD PARTY'S BANK ACCOUNT. ACTING CONTRARY TO THE FIRM'S POLICIES AND PROCEDURES, SMITH FAILED TO DISCUSS OR CONFIRM VERBALLY WITH THE CUSTOMER, THE WIRE TRANSFER REQUESTS, PRIOR TO INSTRUCTING THE BRANCH OFFICER'S TRADER TO LIQUIDATE MUTUAL FUNDS IN AMOUNTS SUFFICIENT TO SATISFY THE REQUESTED WIRE TRANSFERS, AND GIVING THE THIRD PARTY WIRE REQUEST FORMS TO THE SALES ASSISTANT, WHO SIGNATURE GUARANTEED THE WIRE REQUEST FORMS. SMITH PERFORMED THE CONDUCT WITHOUT HAVING RECEIVED PRIOR WRITTEN APPROVAL OR AUTHORIZATION FROM THE CUSTOMER. SMITH FILLED OUT THE SECOND AND THIRD WIRE REQUEST FORMS PER THE INSTRUCTIONS IN THE IMPOSTER'S EMAILS, FALSELY RECORDING AND FALSELY NOTING IN THE TRANSFER FORMS THE REASONS FOR THE CUSTOMER'S WIRE REQUESTS. NEITHER SMITH NOR THE TRADER DISCUSSED OR CONFIRMED VERBALLY, THE MUTUAL FUND TRADES, WITH THE CUSTOMER. THE SALES ASSISTANT SIGNATURE GUARANTEED THE WIRE REQUEST FORMS, FOR THE FIRST AND SECOND WIRE TRANSFERS REQUESTS, AND FAXED THEM TO THE FIRM'S HOME OFFICE, WHEREUPON THE WIRES WERE PROCESSED AND SENT FROM THE CUSTOMER'S ACCOUNT. THE FINDINGS ALSO STATED THAT AFTER THE SALES ASSISTANT FAXED THE THIRD REQUEST, THE HOME OFFICE BECAME SUSPICIOUS OF THE REQUEST GIVEN THE FREQUENT ACTIVITY IN A TWO-WEEK TIME SPAN. THEY CONTACTED THE CUSTOMER, AT WHICH TIME HE INFORMED THE FIRM THAT HE NEVER MADE ANY WIRE TRANSFER REQUESTS. THE FIRM IMMEDIATELY REJECTED THE THIRD WIRE AND PLACED A BLOCK ON THE ACCOUNT. THE FIRM ALSO RECALLED THE TWO WIRES ISSUED EARLIER. THE FIRM REIMBURSED THE CUSTOMER'S ACCOUNT STATEMENT, SUCH THAT THERE WAS NO LOSS TO THE CUSTOMER.
Resolution
Acceptance, Waiver & Consent(AWC)
Sanctions
Civil and Administrative Penalty(ies)/Fine(s)
Amount
$10,000.00
Sanctions
Suspension
Registration Capacities Affected
ANY CAPACITY
Duration
TWO MONTHS
Start Date
8/4/2014
End Date
10/3/2014
Regulator Statement
FINE PAID IN FULL ON JULY 25, 2014.