Okay, you are really, really unhappy at your member firm. You're getting ready to quit and set up shop somewhere else. Take this as a friendly warning. That idea you have about changing your customers' phone numbers and mailing addresses in your firm's database?
How can I put this delicately? Are you nuts? Listen, don't do it. Don't even think about doing it.
But it's nothing major, you say. Maybe (917) 123-4567 becomes (917) 321-4567. Just a minor transposition of three numbers. Or the 12345 zip code suddenly becomes 12435. Or the @aol.com email addresses get switched to @gmail.com.
No doubt that most registered reps view the clients as their clients. There is also little question that most member firms view the clients as their clients. That's a fight that has gone on for generations. There isn't any law that prohibits a former employer from doing whatever it legally can to retain its clients. Unless you have a written agreement with your firm that states that the clients are yours to keep, you better be careful about self-help measures designed to throw a monkey wrench in the firm's ability to communicate with clients.
Just consider the fate of those who have gone before you. Each of the following registered reps had their disciplinary cases by the Financial Industry Regulatory Authority reported in May — three in one month! — so the regulator is on to this gambit, and your employer is likely monitoring bulk changes to customer records.
Shortly before leaving UBS Financial Services at Newport Beach, Calif. to join Morgan Stanley in 2008, Roslyn E. Bixby of Seal Beach, Calif. inaccurately updated telephone numbers and deleted email addresses affecting 38 UBS clients without the authorization of her clients or employer, FINRA said. While contemplating his resignation from UBS Financial Services to work at another broker/dealer, Darrell Steven Current of Louisville, Ky. made unauthorized, inaccurate electronic changes to telephone records of more than 30 clients that had been recorded at the firm. Shortly before resigning from UBS Financial Services in 2008 to work at another member firm, Douglas Seth Land of Edgewater, N.J. made inaccurate changes to more than 70 customers' telephone records electronically stored in his broker workstation in order to slow down other registered representatives, who he figured would be assigned to call his customers after he resigned.
By changing customer telephone numbers and email addresses, all three caused their firms to create and maintain inaccurate books and records. Pursuant to FINRA Acceptance, Waiver and Consent settlement offers, Bixby, Current, and Land separately agreed to the imposition of a $5,000 fine and a one-month suspension in all capacities. Under the offers, all three neither admitted nor denied the FINRA allegations, but consented to the described sanctions and to the entry of findings.
Sometimes, the best thing that I can do for you folks is to display the instruments of torture. Once you see what you will be facing, then it's up to you to decide whether the costs outweigh the benefits. If you still think that falsifying customer records is a smart way to ensure the smooth migration of your accounts, then I've wasted my time.
Sure — I know that it's a strategy that many brokers have used over the years. I also know what you're going to say: If you don't get caught, then what's the big deal? Frankly, my guess is that Bixby, Current, and Land all likely followed the same flawed logic. More to the point, all three were fined and suspended by FINRA.
Bottom line: Playing games with customer records is one hell of a risk for your career. It just doesn't strike me as a good idea when my legal counsel to a client invokes that memorable line from the movie Dirty Harry:
“You've got to ask yourself one question: ‘Do I feel lucky?’ Well, do ya, punk?”
In the Matters of
- Roslyn E. Bixby (FINRA AWC/ 2009016572701/May 2010)
- Darrell Steven Current (FINRA AWC/2008012421501/May 2010)
- Douglas Seth Land (FINRA AWC/ 2008014999101/May 2010)
Writer'BIO:
Bill Singer
is the publisher of RRBDLAW.com and BrokeAndBroker.com
