An irreverent Wall Street Blog
Is FINRA Actin' Kinda Shady In Naming (Or Not) Banks?
February 5, 2015
While still with Destiny's Child, Wall
Street regulator Beyonce admonished:
Say my name, say my nameYou actin' kinda shady
Rumor has it that the diva was
upset with the Financial Industry Regulatory Authority's often inexplicable
policy about naming or not naming an affiliated bank of one of its larger
member firms. Unknown and unappreciated back-up singer Bill Singer (yes . . .
Singer, the singer) launched a failed career as a solo act in which he too
tried to sing a similar tune. In today's BrokeAndBroker.com
Blog, we pay homage to the efforts of the famous and less famous
singer and Singer to shine a light on the puzzling inconsistency with which
FINRA says a bank's
name.
Case In Point
For the purpose of proposing a
settlement of rule violations alleged by the Financial Industry Regulatory
Authority ("FINRA"), without admitting or denying the findings, prior to a
regulatory hearing, and without an adjudication of any issue, Allen R. Maddox
submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA
accepted. In the Matter of Allen R. Maddox, Respondent
(AWC #2014040342101, January 22,
2015).
The AWC asserts that Maddox was
a personal banker at J.P. Morgan Chase Bank, N.A. ("JPM Chase Bank")
as a personal banker and first became registered in 2010 with the bank's
affiliate and FINRA member firm Chase Investment Services Corp.
("CISC"). In October 2012, as part of a mass registration transfer,
Maddox became registered with J.P. Morgan Securities LLC ("JPM
Securities"), where he remained until February 2014. The AWC asserts that
Maddox had no prior relevant disciplinary history in the securities
industry.
The
Girlfriend
The AWC asserts that among
Maddox's duties as a JPM Chase Bank personal banker was to assist customers
with opening their retail bank accounts. In August 2013, a customer allegedly asked
Maddox to assist him in adding the customer's girlfriend to his JPM Chase Bank
Account.
The Blank Signature
Card
On August 31, 2013, the
girlfriend met Maddox at the bank branch, where he gave her a blank signature
card. On that blank card were spaces for
the customer's and the girlfriend's signatures. Upon reviewing the blank card,
the girlfriend purportedly informed Maddox that she did not know what her
boyfriend's signature looked like - and in response to that disclosure, Maddox
allegedly showed her the original signature card with the boyfriend's signature
affixed - and the AWC further asserts that Maddox showed her the signature so
that she could sign the boyfriend's name on the new card.
Apparently, the girlfriend signed
both her and her boyfriend's names on the new card and the AWC asserts that
Maddox did not instruct the girlfriend to note on the card that she had signed
for her boyfriend, and Maddox did not indicate that circumstance on the
signature card. Thereafter, Maddox purportedly submitted the card for
processing.
Policy And
Procedure
The AWC alleges that both JPM
Chase Bank and JPM Securities had policies and procedures prohibiting the
falsification of records; and that employees were reminded not to falsify any
record that relates to the business of the company. Among the admonitions noted
in the AWC, were that both companies prohibited employees from "doing anything
to impair the authenticity of any documentation." According to the AWC, that
proscription extended to "encouraging others to falsify information, and from
signing for customers, or allowing someone other than the customer to sign for
the customer."
Verbal Ain't Gonna Do
It
Online FINRA BrokerCheck
records as of February 4, 2015, disclose that on February 6, 2014, JPMORGAN
Chase Bank "Discharged" Maddox based upon allegations
that:
TERMINATED BY AFFILIATE BANK - NON SECURITIES RELATED. REGISTERED REP, IN THE CAPACITY OF AN AFFILIATE BANK EMPLOYEE, ADMITTED TO ADDING AN INDIVIDUAL TO AN EXISTING BANK CUSTOMERS ACCOUNT AFTER ALLOWING THE INDIVIDUAL TO VIEW THE CUSTOMERS ORIGINAL SIGNATURE CARD AND SIGN THE CUSTOMERS NAME TO THE NEW SIGNATURE CARD. REGISTERED REP STATES THE BANK CUSTOMER GAVE VERBAL PERMISSION TO ADD THE INDIVIDUAL TO THE ACOCUNT [sic] OVER THE PHONE.
FINRA deemed Maddox conduct to
constitute assisting the customer's girlfriend in falsifying a bank signature
care in violation of FINRA Rule 2010. In accordance with the terms of the AWC,
FINRA imposed upon Maddox a $5,000 fine and a one-month suspension from
associating with any FINRA member in any
capacity.
Bill Singer's
Comment
Interesting fact pattern and an
appropriate sanction. All around a compelling and credible bit of regulation.
In today's
BrokeAndBroker.com Blog, FINRA named JPM Chase Bank as
Maddox's banking employer and an affiliate of his FINRA member firm employer
JPM Securities. As such, the regulator ain't actin' kinda shady in this
settlement.
On the other hand, someone --
anyone -- do me a favor. PLEASE! Read my
recent commentary about FINRA's handling of a matter involving an individual
employed in dual bank and brokerage capacities: Elderly
Sugar Daddy, His Young Thing, And His Banker /
Broker (BrokeAndBroker.com
Blog, January 30, 2015). In that case, which also involved JPM Chase
Bank, I thought FINRA came off as kinda shady because the
"affiliate bank" was not named. If you have any idea as to how this disparate
treatment of disclosure involving the same bank and the same brokerage
affiliate makes sense, enlighten
me.
Compare
the disclosure of JPM Chase Bank as the affiliated bank in Maddox
with the non-disclosure in DeFilippis.
This column
brought to you by Destiny's
Child: