William W. Brown of Beverly Hills, California, a stockbroker with J.P. Morgan Securities LLC, was fined $10,000 and suspended from association with any Financial Industry Regulatory Authority (FINRA) member firm in all capacities for fifteen business days, and ordered to pay a customer restitution in the amount of $1,473.88 pus prejudgment interest after consenting to findings that he engaged in improper discretion of an account. Letter of Acceptance, Waiver and Consent, No. 2014041321701 (Dec. 28, 2015).
According to the AWC, from October 1, 2013 through February 27, 2014, Brown had executed sixteen discretionary transactions in one customer’s account without having obtained prior written authorization from the customer and without prior written acceptance of the account as discretionary.
FINRA cited NASD Conduct Rule 2510(b) in Brown’s case, which prohibits Stockbrokers from exercising discretion in a customer account unless the customer has provided written authorization to the Stockbroker to exercise discretion, and the account has been accepted as a discretionary account, in writing, via the Stockbroker’s firm. FINRA found that Brown violated Rule 2010 as a result of the violating Rule 2510(b).
Additionally, the AWC indicated during the relevant period that Brown had entered sixteen transactions as being unsolicited when the trades were, in fact, solicited. As this caused the firm’s books and records to be inaccurate in violation of 17a-3 of the Securities Exchange Act of 1934, Brown had violated FINRA Rules 4511 and 2010.
Firms and individuals, not surprisingly, are prohibited from unauthorized use of customer funds, borrowing of a customer’s securities or funds, forgery, non-disclosures or misstatements of material facts, and various deceptions and manipulations. Such conduct can also be found to violate criminal and other civil laws, and be subject to sanction from the federal and state government bodies.
Public disclosure records via FINRA’s BrokerCheck reveal that William W. Brown has been subject to four disclosure incidents. On July 25, 1991, Maryland’s Securities Division had sanctioned Brown for a period of twelve calendar months immediately following the date of the order granting conditional registration, where Brown was prohibited from maintaining any discretionary trading accounts.
In 1983, The New York Stock Exchange subjected Brown to a $5,000.00 fine, censure and bar for two years from membership or association in any capacity with any member organization and bar for four years from employment in any supervisory capacity with any member organization. On April 24, 2014, Brown was discharged from J.P. Morgan Securities LLC amid allegations of exercising discretion in a client’s account without written and/or prior authorization. On October 15, 2015, Brown became subject to a fifteen day suspension, fine and restitution for activity at his prior firm for improperly exercising discretion in a customer’s account without prior written authorization.
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