September 25, 2019
The Financial Industry Regulatory Authority’s rules limiting outside business activities have tripped up many brokers, but a settlement reached this week with a former Wells Fargo broker in Boston offers clear examples of what is not allowed.
David Manor helped an elderly customer sell mineral rights on his property, accepted more than one-third of the $300,000 proceeds as a “gift” and convinced the client to open an outside brokerage account at Charles Schwab that lost $224,837 in less than three months from options trades that Manor executed by using the client’s login, according to a settlement order issued by Finra on Monday.
The broker hid the activities from Wells and made unsuitable trades, thereby violating six Finra rules, the order said.
The customer, who was 75 when he opened his Wells account in October 2016, shortly before the activities occurred, wrote a check for $100,000 to Manor’s wife with the word “gift” in the memo line, it said. Manor also allegedly used his personal e-mail to discuss the mineral rights sale in order to avoid detection by Wells, discouraged the customer from using the proceeds to add to two variable annuities he owned and filled out Schwab forms indicating that his customer who had never traded options was experienced in the instruments.
In his Wells’ account-opening documents, the customer indicated a moderate investment risk tolerance and moderate ten-year growth objective, according to the consent order.
Manor, who resigned “voluntarily” while under investigation by Wells in January 2018, did not respond to a request for comment. The settlement order, which he accepted without admitting or denying the allegations, bars him from working with a Finra member firm for nine months.
Finra did not impose monetary sanctions because Manor “submitted a sworn financial statement and demonstrated an inability to pay,” the settlement order said. “[T]he sanctions hereby imposed by the acceptance of the offer are in the public interest, are sufficiently remedial to deter respondent from any future misconduct and represent a proper discharge by Finra of its regulatory responsibility under the Securities Exchange Act of 1934,” the order says.
Manor in 2016 reached a $30,000 settlement with a customer of his at Santander Securities who alleged unsuitability and misrepresentation of a product that had surrender penalties. In his BrokerCheck comment on the settlement, Manor objected to the settlement reach with “the unscrupulous complainer” and objected to public mention of the agreement.
“The Kafkaesque designation of ‘settled’ should not appear on Mr. Manor’s record as he is not a part of the settlement and carries no culpability,” the comment says.
Manor began his five-and-a-half year brokerage career with a six-month stint at Merrill Lynch, and worked at Santander for three-and-a-half years before joining Wells Fargo in August 2016.
Thanks to the Courtesy of :