Robert W. Baird, headquartered in Milwaukee, Wisconsin, as well as Rolf Parker Griffith III, a stockbroker and supervisor with Robert W. Baird, were sanctioned by Financial Industry Regulatory Authority (FINRA) after consenting to findings that the firm and Griffith failed to properly supervise a registered representative’s misuse of customer funds. Letter of Acceptance, Waiver and Consent, No. 2014040147502(July 27, 2016).
According to the AWC, Griffith was responsible for supervising a registered representative, Patrick Garrett, in the course of his dealings with customers. In December 2013, Griffith had reviewed and ultimately approved of a trade correction request made by Garrett to his firm. Apparently, Garrett’s intent was to transfer a customer’s stock from one account to an unrelated customer account.
Patrick Landon Garrett was barred by FINRA in August 2016, after it was found he misused customer funds and falsified firm documents.
The AWC stated that Garrett claimed that he made a mistake with respect to the first customer’s stock allocation that was made months prior. However, such statement was false. Supposedly, Garret’s plan was to transfer trade losses that were unrealized in the one account to another unrelated customer account.
FINRA claimed that Garrett’s request to Griffith concerning the trade correction should have alerted her to red flags, as his transfer to the unrelated customer’s account constituted a stock purchase at $3.00 higher per share than the market value of the stock at the time of the transfer – which resulted in the second customer bearing unrealized $34,000.00 loss immediately. Apparently, the second customer never agreed to buy such stock at the price Garrett positioned. FINRA also found that it was odd how Garret’s conduct of submitting the trade correction had taken place six months after his alleged mistake, which was not typical.
FINRA claimed that the firm’s protocol in reference to reviewing and approving trade correction requests required Griffith to follow the firm’s instructions, which called for the firm or the registered representative to assume the loss associated with the mistaken stock allocation. Here, Griffith’s approval of Garrett’s request caused the customer to bear the loss. FINRA found the firm and Griffith to have violated FINRA Rules 2010 and NASD Rules 3010(a) and 3010(b) in this regard.
The AWC further stated that the firm failed to implement adequate supervisory procedures to review and approve of trade corrections. Apparently, the firm’s instructions were unclear, and supervisors failed to understand the necessary application of such procedures. FINRA noted that the firm failed to identify, in supervisory procedures, how much documentation was necessary for supporting a correction to a trade error, who was obligated to escalate trade error issues, and who was responsible for making a determination regarding the losses associated with such trade errors. As such, FINRA found the firm’s supervisory failures to be violative of FINRA Rule 2010 and NASD Rules 3010(a) and 3010(b).
In connection with the matter, Robert W. Baird was censured and fined $200,000.00, and agreed to an overhaul of their supervisory procedures to be in compliance with applicable rules and regulations. Additionally, Griffith was fined $5,000.00 and temporarily suspended from associating with any FINRA member firm in a principal role.
Guiliano Law Group
Our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or an evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
