FINRA fined and suspended Morgan Stanley sales assistant Magnolia Umangil Gaerlan of El Segundo, California for effecting multiple wire transfers to an unaffiliated third party account without proper authorization or consent and for making false statements regarding the transfers.
According to the investigation, Gaerlan, at the direction of her supervising Morgan Stanley Smith Barney, LLC broker, processed the wire requests after a series of fraudulent e-mails led the pair to believe the fund transfer requests came from the real customer when in fact an imposter had hacked into the customer's personal e-mail account.
To combat this possibility of hacking and impersonation, FINRA has rules and procedures in place that require brokers and other associates to safeguard client funds and carefully review transactions transferring money to thrid-party accounts, whether by phone, check, or write transfer. Many firms require the broker to verbally confirm the fund transfer request with the customer via telephone conversation. During this telephone conversation, the firm representative is generally obligated to verify the customer's identity through a series of questions and the knowledge gained through a personal service relationship with the customer.
FINRA alleges Gaerlan falsely stated on multiple firm documents that she had spoken to the victimized customer and this customer verbally authorized the fund transfer requests. The investigation states this was not true as the customer had no knowledge of and did not consent to the wire transfers. Accordingly, Gaerlan was charged with making misrepresentations to the firm.
In total, Gaerlan allegedly effected wires of $265,000, including one in excess of $100,000, which is the threshold amount for a required Verification Form, which Gaerlan submitted with the request even though this document was falsely produced as the customer did not consent nor was party to a phone call for verification purposes. As such, the imposter was able to liquidate an account worth $265,000 for the purpose of financing a new business.
If you have invested with Morgan Stanley or with any financial adviser, broker or firm whose failure to safeguard your funds or other failure to adhere to policies and procedures regarding transactions or trading in your accounts has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for investigation and consultation.