October 1, 2019
The Financial Industry Regulatory Authority has slapped a veteran independent broker in Virginia with a fine and suspension for using his personal email and computer to communicate with clients in violation of industry rules.
Raleigh Kraft, who is now with independent brokerage H. Beck Inc. in Front Royal, Virginia, agreed to a two-month suspension and $5,000 fine for violating Finra’s wide-ranging Rule 2010 requiring brokers and firms to maintain “high standards of commercial honor,” as well as Wells’ policies on client communication.
From April 2008 to October 2016, while associated with Wells Fargo Advisors’ Financial Network of independent contractors, Kraft routinely used a personal email address to communicate with customers about business-related matters, avoiding compliance and supervisory oversight, according to a consent letter that Finra accepted on September 27.
Kraft, who has been registered as a broker since 1982, also caused Wells to violate Finra’s books and records rule by communicating with clients outside of the firm’s jurisdiction, according to the settlement. Wells required the broker to leave FiNet in October 2016 for multiple client communication violations, according to BrokerCheck, and regulators in Nevada also have barred him from acting in a supervisory capacity over the issue.
Kraft agreed to the Finra penalty without admitting or denying the findings. He did not return a request for comment.
He started his brokerage career in April 1982 with Johnston, Lemon & Co., and worked at seven other firms before joining Wells in 2008.
The Finra letter did not spell out whether Kraft or his customers initiated the communications, but the result is a cautionary tale in an age when instant messaging and email are routine conveniences, lawyers said.
“FAs send texts using their cell phone because a client will call or send them a text, and so it’s hard to resist not responding to a client when a client initiates communication,” said Rogge Dunn, a Dallas-based securities employment lawyer. “The takeaway for the FA is you just got to resist that temptation.”
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