FINRA censured Fidelity Brokerage Services and issued a $600,000 fine for failing to adequately supervise a representative who misappropriated $758,000 from 37 customers by using his data access to change plan participant names to his own name, or that of an account he created and controlled.
According to the findings, Fidelity failed to have a reasonably designed system and written supervisory procedures in place to supervise associates' access to stock plan services (SPS) accounts. As such, a Fidelity associate over an eight-year period allegedly converted $758,000 by improperly accessing customer accounts and changing SPS account data without logging those changes.
The report states that Fidelity's employee then changed the plan participant's name to his own name, or name of an SPS account he created and controlled, and then linked the victim's SPS account to his account, either through writing fraudulent checks in his own name he then sent to himself or by sending illicit wire transfer instructions to misappropriate the funds.
Investigators discovered that these actions caused the issuance of 83 unauthorized checks totalling approximately $380,000 and 183 unauthorized wire transfers totaling $378,000 in fraudulent outbound conversion from the victims' SPS accounts.
FINRA found that Fidelity failed to adequately surveil outgoing money movements from SPS accounts at the time of the fraud, and thus initiated an investigation culminating in its fine and censure for inadequate supervision.
If you invested with Fidelity Brokerage Services or with any broker or investment adviser that misappropriated funds from your account or engaged in another fraudulent scheme resulting in losses or other damages, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.