Timothy Jay Scherwa of Morris Plains New Jersey a stockbroker formerly registered with Wells Fargo Clearing Services LLC has been fined $7,500.00 and suspended for two months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he engaged in unauthorized trading in customer accounts. Letter of Acceptance Waiver and Consent No. 2017056095001 (Sept. 24, 2018).
According to the AWC, Scherwa was subject of Wells Fargo’s policies and procedures pertaining to discretionary trading. The policies disallowed representatives including Scherwa from effecting trades in a customer’s account on a discretionary basis unless the accounts had been approved by a customer providing written consent of the exercise of discretion.
The AWC stated that from May 15, 2014 to May 15, 2017, Scherwa placed three hundred eighty two trades in twelve of the firm’s accounts that were not authorized for discretionary trading. Apparently, the customers never provided consent, and their accounts were not approved by the firm before trades were effected in their investment accounts.
FINRA noted that Scherwa’s conduct was violative of FINRA Rule 2510(b), which prohibits representatives from exercising discretion unless the firm provides written approval of the discretionary account and the customer provides written authorization beforehand. Consequently, FINRA found Scherwa’s conduct violative of FINRA Rule 2010.
FINRA also stated that Scherwa falsified Wells Fargo’s annual compliance questionnaire. Apparently, Scherwa was required as a registered representative to make attestations in the firm’s questionnaires concerning any activities involving the exercise of discretion within the customers’ accounts.
Particularly, on April 2, 2015, an annual questionnaire had been submitted by Scherwa to the firm, in which Scherwa indicated that there were no accounts for which he exercised discretionary power. The AWC additionally stated that in March of 2016 and March of 2017, two more annual compliance questionnaires had been submitted by Scherwa to the firm where he lied about his discretionary trading in twelve customer investment accounts. FINRA found Scherwa’s failure to be forthcoming to be violative of FINRA Rule 2010.
Wells Fargo Clearing Services LLC discharged Scherwa on October 16, 2017 for effecting discretionary trades in customer accounts. Since September 24, 2018, Scherwa has been employed by Capitol Securities Managements Inc.
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