An irreverent Wall Street Blog
Not Getting Away With What You Are Trying To Get Away With On Wall Street
February 22, 2021
When I first starting working in-house at Smith Barney, Harris Upham & Company in 1982, folks in the biz thought that the industry's regulators were, by and large, idiots. Similarly, when I started working as a regulator in 1985 at the old American Stock Exchange and then NASD, a lot of my regulatory colleagues thought that those in the biz were con artists, cheats, liars, and fraudsters. Some 40 years later, not much has changed in terms of how the regulated and the regulators view each other. After all my years on Wall Street, however, I've realized that those who are regulated are not quite as smart or as clever as they think they are when it comes to getting away with something that they were certain that they would get away with. All of which brings us to today's blog in which we come upon some folks trying to get away with something and we come upon FINRA imposing fines and suspensions
Mah AWC
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, King Wei Mah submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of King Wei Mah, Respondent (FINRA AWC 2019062198301)
https://www.finra.org/sites/default/files/fda_documents/2019062198301
%20King%20Wei%20Mah%20CRD%206564232%20AWC%20sl.pdf
%20King%20Wei%20Mah%20CRD%206564232%20AWC%20sl.pdf
The AWC alleges that King Wei Mah was first registered in 2016 with Waddell & Reed ("W&R"). The AWC asserts that Mah "has no relevant disciplinary history." As alleged in part in the AWC [Ed: "NPI" is "Nonpublic Information"]:
Mah was the sales assistant for RR-1, another W&R registered representative. In anticipation of RR-1 and Mah joining New Firm, Mah improperly removed NPI for approximately 175 W&R customers by downloading it from W&R's computer network and using a personal email account to email it to a personal email account belonging to RR-1. Mah downloaded and transmitted the information without W&R's or the customers' knowledge or consent.
After RR-1 and Mah resigned from W&R, Mah emailed W&R customers' NPI to New Firm. The information provided included NPI for 23 W&R customers who had opted out of W&R's privacy policy regarding the disclosure of limited customer information when a W&R registered representative moves to another firm. After both RR-1 and Mah had resigned from W&R, Mah also used a personal email account to send sensitive NPI, including account numbers and account balances, for approximately 100 W&R customers to RR-1, without W&R's or the customers' knowledge or consent.
FINRA Sanctions
In accordance with the terms of the AWC, FINRA found that Mah caused W&R to violate the SEC's Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information (Regulation S-P), and in so doing, he violated FINRA Rule 2010; and the self regulator imposed upon Mah a $5,000 fine and a 15-business-days suspension from associating with any FINRA member in any capacity.
Perona AWC
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, Andrew D. Perona submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In the Matter of Andrew D. Perona, Respondent (FINRA AWC 2019062198302)
https://www.finra.org/sites/default/files/fda_documents/2019062198302
%20Andrew%20D.%20Perona%20CRD%202452636%20AWC%20sl.pdf
The AWC alleges that Andrew D. Perona was first registered from September 2007 through March 2019, he was registered with Waddell & Reed ("W&R"). The AWC asserts that Perona "has no relevant disciplinary history." As alleged in part in the AWC:
In accordance with the terms of the AWC, FINRA found that Perona caused W&R to violate the SEC's Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information (Regulation S-P), and in so doing, he violated FINRA Rule 2010, and the self regulator imposed upon Perona a $5,000 fine and a 15-business-days suspension from associating with any FINRA member in any capacity.After Perona resigned from W&R, Perona emailed W&R customers' NPI to New Firm. The information provided included NPI for 58 W&R customers who had opted out of W&R's privacy policy regarding the disclosure of limited customer information when a W&R registered representative moves to another firm. After Perona resigned from W&R, Perona also improperly removed NPI, including account numbers and account balances, for approximately 50 W&R customers by emailing the information to a private email account without W&R's or the customers' knowledge or consent.
Bill Singer's Comment
I have no idea whether Perona was the unnamed "RR-1" in the Mah AWC. I'm thinking he was or might have been the same W&R departing rep, but, like who the hell knows. It could all be mere coincidence. So -- now that I've addressed that issue, please don't ask me if Perona and "RR-1" are one and the same. Maybe W&R was just having a bad run of Reg SP issues.
As to what to make of all these comings and goings and takings and emailings, that's simple. Covid is still in the air. Given the many phone calls that I'm fielding from reps, once the pandemic is in our rearview mirror, a lot of folks are getting ready to move on from their current brokerage firm. For some unhappy campers, they feel that their present firm let them down during the pandemic and isn't providing anywhere near the level of support that warrants the commission split in place. For other folks, they have had an epiphany: I'm able to work home without the pricey support of my wirehouse, and, as such, I'm going indie/regional and keeping 80 to 90% of my commissions -- screw the grid payout!
Whether you're one of the fed-up industry employees or simply looking forward to working from home or from your new digs in the country or at the beach, just take note of how Mah and Perona went astray. More to the point, as I have warned so many of you over the years, you're just not that smart and your former employer just ain't that stupid. You may ask me "Who's gonna know? Who's gonna find out?" And I will continue to cite to cases such as Mah and Perona as proof that they almost always find out, and they do so at the worst possible time with the worst possible consequences.