South Florida Arbitration & Litigation Lawyer Blog
Improper Borrowing of Funds From Client by FINRA Licensed Account Executive, FINRA Arbitration and Litigation Attorney, Russell L. Forkey, Esq.
January 2012:
Bruce Benjamin Katz (CRD #1234370, Registered Representative, Melville, New York) submitted an Offer of Settlement in which he was suspended from association with any FINRA member in any capacity for 18 months. In light of Katz’ financial status, no monetary sanctions were imposed. Without admitting or denying the allegations, Katz consented to the described sanction and to the entry of findings that he borrowed a total of $82,000 from a customer without obtaining his member firm’s prior written approval. The findings stated that Katz assured the customer that he would pay back her money. Katz has not repaid the principal or any interest on the loans. When Katz borrowed the money, the customer was 75 years old and retired. The findings also included that at the time Katz borrowed the money, his firm’s WSPs did not allow the borrowing and lending of money between registered persons and firm customers unless the customer was the registered person’s relative. Katz did not request or obtain the firm’s permission to borrow money from the customer and was not related to the customer. Katz was aware of the firm’s procedures and certified that he had received and read the firm’s written policies and procedures regarding financial arrangements with clients. Katz did not disclose to his firm that he had obtained loans from the customer. FINRA found that since the firm’s procedures did not permit borrowing, Katz could not borrow money from the customer in compliance with NASD Rule 2370, and the loans were not in conformance with conditions set forth in NASD Rule 2370(a)(2)(A)-(E) for permissible loans.
The suspension is in effect from November 21, 2011, through May 20, 2013. (FINRA Case #2009018906501).