South Florida Arbitration & Litigation Lawyer Blog
Fraud, Theft and Negligent Supervision FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
October, 2011:
Woodbury Financial Services, Inc. (CRD #421, Oak Dale, Minnesota) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $75,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that a firm registered representative converted approximately $990,000 from the firm’s customers, through separate wire requests; these wire requests directed that funds be withdrawn from the firm’s customer accounts that he serviced, and wired to a bank account that he controlled. The findings stated that the firm’s supervisory control system in this area failed to include a policy or procedure requiring a review to detect or prevent multiple wires, from one or numerous customers, going to the same third-party account. The findings also stated that the firm’s system failed to include exception reports that would have identified multiple customer wires going to the same third-party account. The findings also included that the firm failed to detect that the registered representative had submitted separate wire requests, from different firm customers, resulting in the transmittal of approximately $990,000 of those customers’ funds to a bank account that he controlled. FINRA found that the firm failed to establish, maintain and enforce a supervisory system reasonably designed to adequately review and monitor all transmittals of funds from customers’ accounts to third-party accounts and outside entities.
(FINRA Case #2010024996801).