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by Bill Singer
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Written: August 28, 2014

On June 24, 2014, the Financial Industry Regulatory Authority (“FINRA”) Department of Enforcement filed a Complaint against James M. Katayanagi, who, without admitting or denying the allegations, submitted an Offer of Settlement dated August 5, 2014, which FINRA’s National Adjudicatory Council accepted. FINRA Department of Enforcement, Complainant, v. James M. Katayanagi, Respondent (FINRA Office of Hearing Officers, Order Accepting Offer of Settlement, 2013035572001, August 13, 2014).

Katayanagi was first registered in 2008 and in March 2009 was registered with FINRA member firm Chase Investment Services Corp (after October 2012 a J.P. Morgan LLC) and was also employed by J.P. Morgan Chase Bank, N.A. (the “Bank”) as a personal banker.
FINRA alleges that from January 2012 through November 2012, Katayanagi had access to the Bank’s computer system, which he used to creat temporary Automated Teller Machine (“ATM”) cards, which were issued in the names of various Bank customers. Further, Katayanagi allegedly created Personal Identifiaction Numbers (“PINs”) for the temporary cards.

Without the authorization of the customers in whose names he had created the ATM cards and PIN numbers, Katayanagi made the following unauthorized withdrawals:
  • From January 13, 2012 through January 15, 2012: about $2,512 from Customer A's Bank account via ATMs at Bank #1 and Bank #2 in Astoria, NY; 
  • From January 18, 2012 to February 19, 2012, about $2,010 from Customer B's Bank account via an ATM at Bank #1 in Astoria, NY; 
  • From March 2, 2012 to March 5, 2012, about $3,018 from Customer C's Bank account via ATMs at Bank #3 in New York, NY and Bank # 4 in Astoria, NY; 
  • From October 18, 2012 to October 23, 2012, about $3,250 from Customer D's Bank account via ATMs at Bank #3 in Carle Place,NY and New York and Bank #1 in Astoria, NY: 
  • On November 7, 2012, about $1,005 from Customer E's Bank account via an ATM at Bank #1 in Astoria, NY;  
  • On November 7, 2012, about $510 from Customer F's Bank account via an ATM at Bank #1 in Astoria, NY;  
  • On November 7, 2012, about $305 from Customer G's Bank account via an ATM at Bank #1 in Astoria, NY: and 
  • From November 14, 2012 to November 15, 2012, about  $1,508 from Customer H's Bank account via an ATM at Bank #1 in Astoria, NY
According to online FINRA records, on December 12, 2012, the Bank “discharged” Katayanagi based upon allegations that:


Katayanagi was arrested and charged with felony Grand Larceny in the Third Degree. In April 2013, pursuant to a plea bargain, he pled guilty in the Criminal Court of the City of New York to misdemeanor petit larceny. If,  after a year, Katayanagi had fulfilled certain conditions, his plea would be vacated and he would be allowed to re-plead to a disorderly conduct violation; and those conditions were satisfied in April 2014. 

Based upon the terms of the Offer of Settlement, FINRA imposed upon Katayanagi a Bar from association with any FINRA member firm in any capacity. 

Bill Singer's Comment

Disorderly conduct? Are you kidding me?


Written: August 27, 2014

What's A JP Morgan employee and a customer's debit card have to do with smoking too much dope and singing about it on the old Lawrence Welk show? Well, frankly, nothing at all . . . well, sort of, but it's a stretch. If nothing else, however, this is a hell of a tease to get you to read the article. I promise that there is something in here about a debit card, toking, and Lawrence Welk.

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, Pedro Castaneda submitted a Letter of Acceptance, Waiver and Consent (“AWC”), which FINRA accepted. In the Matter of Pedro Castaneda, Respondent (AWC 2013037774401, August 13, 2014).

Castaneda was first registered in 2006 and by October 1, 2012, he was registered
with J.P. Morgan Securities, LLC (JPMS). While associated with JPMS, Castaneda was also employed by JP Morgan Chase Bank (JPMC Bank) as a personal banker. The AWC asserts that he had no prior relevant disciplinary history.


On February 28, 2013, Castaneda assisted a bank customer in adding her sister as a new signatory to her JPMC Bank checking account, and, in furtherance of that change, Castaneda printed a debit card for the sister and another debit card for the customer. The AWC asserts that Castaneda “inadvertently” put the customer’s card in his pocket and took it home.
Thereafter, on March 1, 2013, Castaneda instructed his girlfriend to pay for plumbing services that were to be performed at his home that day, and he gave her a debit card to use to make the payment.

Yeah, you got it: Castaneda gave his girlfriend the Bank customer’s debit card. 

As a result, on March 1, 2013, the customer’s and sister’s Bank account was charged $505.08 for plumbing services performed at Castaneda’s home.

An Error

Now, here’s the thing: According to the AWC, and we must fully defer to FINRA’s recitation of facts because that self-regulatory organization investigated this matter and brought the charges, did not realize that the card he had given to his girlfriend was the Bank customer’s. Moreover, when he “realized the error shortly thereafter,” the AWC asserts that Castaneda not only contacted the customer and sister and disclosed the erroneous charge to their account but “arranged to have the plumbing company refund the charges,” which was purportedly accomplished on March 4, 2013. 

A Matter Of Notice

Castaneda did not notify the Bank or JPMS of the erroneous charge. The two employers learned of the matter pursuant to a March 5, 2013, complaint from the Bank customer. 
According to online FINRA records, on June 28, 2013, the Bank “discharged” Castaneda based upon allegations that:


FINRA deemed Castaneda’s conduct to constitute a violation of FINRA Rule 2010 and fined him $5,000 and suspended him for one year from association with any FINRA member firm in any capacity.

Bill Singer’s Comment

I don’t like this case. I don’t understand this case. I don’t understand the sanctions.

For starters, it appears that Castaneda was not represented by legal counsel and apparently negotiated the AWC on his own. That may well explain why he agreed to a $5,000 fine and a one-year suspension – and “yes” this was a voluntary settlement, so let’s at least acknowledge that Castaneda entered into this settlement on his own. I'll give that much to FINRA.

As I noted in my discussion above, we really have to accept the facts as set forth by FINRA in the AWC. As such, what do we have here? We have a registered person/banker who “inadvertently” took home a customer’s debit card. It may have helped if FINRA explained why it had concluded that the pocketing of the card was inadvertent. For example, and this may well be the case, Castaneda may have physically handed one card to the sister and intended to mail the customer’s card upon returning to his desk but forgot. I’m not saying that’s what happened. I am merely offering that as an explanation of how one inadvertently takes a debit card home. Notwithstanding, that’s FINRA’s version of the facts.

Next, we are told that Castaneda gives a debit card to his girlfriend, not realizing it’s the customer’s. I truly have to call FINRA out on this sloppy recitation of the facts. I mean, seriously, couldn’t you offer a bit more detail as to this act? For starters, assuming that Castaneda inadvertently put the card in his jacket pocket and absent-mindedly took it home, did he discover his mistake at some point after taking off his jacket and put the customer’s card someplace in his home with the intent to bring it back the next day? February 28, 2013 was a Thursday and March 1, 2013, was a Friday.  We’re talking next day.

When the AWC says that Castaneda didn’t realize that the debit card he had handed to his girlfriend was the customer’s – just how the hell do you not realize that? Again, I fully blame FINRA for this lack of clarity.  Perhaps Castaneda had removed the customer’s card from his jacket pocket, put it in a desk drawer with his own Bank debit card or he had placed the customer’s debit card in his wallet with the intent of taking it back the next day, and then pulled the customer’s debit card thinking that it was his own. Yeah, like I said, “perhaps.” Except, you know, by the time an individual is getting charged and settling in an AWC, the “perhaps” stuff should no longer be in play. Even more inexplicably, FINRA doesn’t he confirm that Castaneda had his own Bank debit card, which would at least make his confusion a tad more understandable.

In the end, we are left with an AWC that asserts that Castaneda put the customer’s debit card in his pocket, absent mindedly took it home, and mistakenly used it to pay for his plumbing repairs. According to the AWC, and I accept it, there wasn’t a scintilla of a suggestion that Castaneda intended to do anything wrong. Moreover, he immediately communicated his errors to the customer and her sister and had the charges reversed. As classic a no-harm-no-foul bit of nonsense as one can imagine. If, in fact, there was any misconduct, it appears to have been in not disclosing to the Bank and/or JPMS that the screw-up had occurred. 

Since FINRA is entitled to play games with not filling in the blanks in this AWC, let me enjoy myself with whatever speculation such regulatory shortcomings encourage. How about we assume that Castaneda just had one of those “oh shit” moments that we all do? He realized he had mixed up the customer’s debit card with his own and before anyone wound up paying for something that wasn’t theirs, he reversed the mistake without consequence to the customer or sister. As such, he may have assumed that there was nothing to report as he had managed to extinguished the flame before it became a larger regulatory or compliance fire. If that’s the case, then all that we have here is someone who made two mistakes. One, he took home a customer’s debit card by accident. Two, he mistakenly handed that card to his girlfriend to pay a plumber.

You may have your own theories and opinions as to what did or did not really happen here. If you want to blame someone for that uncertainty, I point you in the direction of FINRA. Notwithstanding, as a matter of law and regulation, the facts as set forth in the AWC are the final words.  Consequently, Castaneda simply forgot about the card in his pocket and mistakenly handed it to his girlfriend. That’s it. No ifs, ands, or buts.

And for this colossal bit of humanity, this guy gets fined $5,000 and suspended for a year? I mean are you kidding me?  What the hell – a respondent shows up without a lawyer and you wring him out for as much as you can get?  

Speaking Of -- Or Singing Of -- Mistakes

In the end, all that I see is a guy who made a mistake. Frankly, the whole episode comes off more funny -- in the eye rolling sense -- than serious. 

It sort of reminds me of the the 1971 Lawrence Welk Show featureing a lovely couple singing "One Toke Over The Line" by Brewer and Shipley. No, I'm not kidding. They were actually singing about one toke too many. And on the Lawrence Welk show.

If you listen to Mr. Welk at the end of the clip, he apparently thought, mistakenly, that this song was a "modern spiritual by Gail and Dale." All of which makes you wonder why Myron Floren, the accordionist who introduced the song, was coughing. You think Mr. Welk got fined $5,000 and suspended from the air for a year because he featured a song about someone who likely had one puff too many on a joint?


Written: August 26, 2014

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