South Florida Arbitration & Litigation Lawyer Blog
Unauthorized Borrowing of Money from Client and Negligent Supervision FINRA Arbitration and Litigation Lawyer, Russell L. Forkey, Esq.
October, 2011:
Jo Ann Marie Head (CRD #3009195, Reg. Representative, Whittier, California) was barred from association with any FINRA member in any capacity and ordered to pay restitution to a customer in the principal amount of $19,000, which represents the amount of a loan that has not been repaid, plus interest. The sanctions were based on findings that Head conveyed false and exaggerated account values to customers verbally and with falsified documents. The findings stated that Head borrowed $20,000 from a customer and has repaid only $1,000 to the customer, contrary to the firm’s written procedures prohibiting representatives from borrowing from customers without branch manager or other supervisor approval and the written approval of the firm’s compliance department; Head did not request or obtain permission from her firm to borrow money from the firm’s customer. The findings also stated that Head settled and/or offered to settle a customer complaint without her firm’s knowledge or authorization. The findings also included that Head sent an unapproved and materially false letter to a bank by preparing, signing and mailing a letter to a bank stating that a customer’s assets totaled over $4 million in order to assist the customer in obtaining a mortgage loan; although the firm’s procedures required that outgoing correspondence be reviewed and approved before mailing, Head neither sought nor obtained approval for the letter. FINRA found that Head exercised discretion in customer accounts without written authorization; Head neither sought nor obtained authorization from customers or her firm to exercise discretion in their accounts. FINRA also found that Head mischaracterized solicited trades in customers’ accounts as unsolicited, causing her firm’s books and records to be inaccurate. In addition, FINRA determined that Head submitted false and evasive information to FINRA in response to a written request for information. Moreover, FINRA found that Head repeatedly sent emails and text messages to customers from her personal email accounts, which violated her firm’s policies forbidding the use of personal email accounts and mandating that business related electronic communications with customers occur within the firm’s network; Head’s use of her personal email account prevented the firm from reviewing her email and text messages, and delayed the discovery of her misconduct in customers’ accounts. Furthermore, FINRA found that Head failed to appear or otherwise respond to FINRA requests for testimony. (FINRA Case #2009017530101).