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Regulatory Checkmate For Stockbroker
April 8, 2015
Human nature is a curious things. At times, folks do things so colossally stupid that it becomes awe inspiring. In a recent FINRA regulatory settlement -- well, actually, in two recent FINRA settlements -- we have the somewhat humorous and baffling conduct of a registered representative. This individual seems to have largely ducked the proverbial bullet by managing to settle charges with a suspension. As you will learn, he did one really foolish thing that persuaded FINRA to bar him.
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, Robert Charles Mangold submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Robert Charles Mangold, Respondent (AWC #2015044146601, March 31, 2015).
In 1987, Mangold entered the securities industry and became registered with several FINRA firms. During the relevant times of 2010 through September 18, 2010, Mangold was registered with Financial Network Investment Corporation; and, thereafter, with LPL Financial LLC from September 18, 2012 through May 29, 2013.
2014 AWC
Mangold was the subject of a prior October 24, 2014 AWC (the "2014 AWC"), which alleged in pertinent part:
On September 4, 2012, Mangold borrowed $18,000 from customer BS. Mangold's employing firm, FinancialNetwork, prohibited its registered representatives from borrowing money from customers who were not immediate family members. BS was not an immediate family member. Mangold made a partial repayment of $10,000 to BS on May 2, 2013.Between September 28, 2012, and October 2, 2012, Mangold borrowed $38,000 from customer AS. Mangold's employing firm, LPL, prohibited its registered representatives from borrowing from customers. Mangold made a partial repayment of $15,000 to AS on July 30, 2013. By borrowing money from two customers when specifically prohibited by his firms, Mangold violated FINRA Rules 3240 and 2010.
According to an online FINRA BrokerCheck report as of April 8, 2015, LPL "Discharged" Mangold on May 29, 2013 based upon allegations that he had:
BORROWED MONEY FROM AN INDIVIDUAL IN VIOLATION OF FIRM POLICY
Pursuant to the 2014 AWC, Mangold was suspended for 60 days with all FINRA members in all capacities but no monetary sanction was imposed in light of his discharge in bankruptcy. In the Matter of Robert Charles Mangold, Respondent (AWC #2013037265701, October 24, 2014).
A Matter of Proof
Pursuant to FINRA's investigation of the borrowing allegations noted in the 2014 AWC, on July 30, 2013, Mangold had submitted a signed statement asserting, in part, that on July 30, 2013, he had sent a $15,000 check to customer AS from whom he had borrowed $38,000 in 2012. In support of that assertion, Mangold submitted as an attached Exhibit A a copy of the check.
In fact, Mangold never sent the check submitted as Exhibit A to his written statement to FINRA. Accordingly, FINRA deemed that Mangold had misled its investigative Staff, in violation of FINRA Rules 8210 and 2010.
In accordance with the terms In the Matter of Robert Charles Mangold, Respondent (AWC #2015044146601, March 31, 2015), FINRA imposed upon Mangold a Bar from associating with any FINRA registered firm.
Bill Singer's Comment
Omigod . . . I mean, seriously?
You got fired for borrowing in 2012 from two customers. You're under investigation by FINRA in 2013 for improperly borrowing $56,000 from two customers. Somehow, you take those circumstances as a sign to lie to FINRA about having paid $15,000 via check to one of the clients? You enter into a 2014 regulatory settlement and not only assert that you made a $15,000 repayment to one of the customers on July 30,2013 but, amazingly, you submit a copy of the check as corroboration -- when, in fact, you never tendered the repayment to the customer! Okay, sure -- clever, funny, and yet another entry in the annals of the lore of Wall Street; however, all that hard work only converted a 60-day suspension into a Bar.
I would have liked to know how FINRA learned that the check had not been sent but, you know, that may be a state secret and if the regulator told me, well, I guess that they would have to kill me.