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Stockbroker Fined And Suspended In Email Transfer of Customer Info From Merrill To Ed Jones
November 18, 2015
We can debate the point endlessly: Whether customer information is or should be the property of the servicing stockbroker or of the brokerage firm -- and someone, perhaps a dim voice in the background, might even argue that the information is the customer's. Frankly, it's an old battle waged with merit on all sides. Lost in the smoke on that particular battlefield, however, is the simple fact that Wall Street is subject to many laws, rules, and regulations about what customer information may and may not be taken when a stockbroker switches employers. Some departing employees think they're clever and found a way around the industry's restrictions. Some regulators would beg to differ. Consider this recent FINRA regulatory settlement.
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, Jason Gerald
Medvec submitted a Letter of Acceptance, Waiver and Consent ("AWC"),
which FINRA accepted. In the Matter of Jason Gerald Medvec,
Respondent (AWC 2014039937101, November 10,
2015).
Online FINRA BrokerCheck records disclose
that since 2005, Medvec had been registered with seven different member firms through January 2015. In pertinent part, he was registered with
Merrill Lynch, Pierce, Fenner & Smith Inc. from April 2011 through
January 2014; and with Edward Jones in January 2014. The AWC asserts that
Medvec had no prior disciplinary history in the securities
industry.
January 2 Email
The AWC asserts that on January
2, 2014, Medvec sent an email from his Merrill Lynch mailbox to his personal
mailbox, and the email transmittal included an attachment containing Merrill
Lynch customer information. That information purportedly included 50 names, 50
account numbers, and 35 telephone numbers plus various account balances.
The AWC asserts that during the
relevant time, Merrill Lynch's policies required employees to protect
confidential customer information to which they had gained access either
through a direct transfer to them by the firm or through their ability to
access the firm's files. Further, such customer information was not to be
disclosed to unauthorized persons within or outside of the the firm.
January 3 Email
On January 3, 2014, the day
Medvec resigned from Merrill Lynch and joined Edward Jones, he allegedly sent
an email from his Merrill Lynch mailbox to his personal mailbox, and attached
to that transmittal was a spreadsheet he entitled: "vacation," which
purportedly contained the names of 8 Merrill customers and 9 of their account
numbers. The AWC asserts that during the relevant time, Edward Jones' policies prohibited registered representatives from bringing customer-related information from their prior firm.
The AWC characterizes the information Medvec took from Merrill as
non-public personal information as defined under Regulation S-P. The AWC further asserts that the information at
issue was taken without Merrill Lynch's permission and that Medvec evidenced an
intent to conceal his conduct by falsely entitling the attached file as
"vacation."
Discharged
According to online FINRA
BrokerCheck records as of November 18, 2015, employer Edward
Jones "Discharged" Medvec on January 8, 2014 based upon allegations
that:
MR. MEDVEC'S EMPLOYMENT WAS TERMINATED AFTER THE FIRM RECEIVED NOTIFICATION FROM HIS PREVIOUS EMPLOYER THAT HE TRANSMITTED CLIENT INFORMATION TO HIS PERSONAL E-MAIL ADDRESS
Regulatory Sanctions
FINRA deemed Medvec's conduct as
causing Merrill Lynch to violation Regulation S-P, in violation of FINRA Rule
2010. In accordance with the terms of the AWC, FINRA imposed on Medvec a $5,000 fine and a
10-business-day suspension from association with any FINRA member in any
capacity.