Finra Drives Home Corner-Cutting Rules, Fining Brokers Already Terminated
Some might call it rubbing salt into wounds that former brokers have already endured, but the Financial Industry Regulatory Authority in recent days drove home the message that brokers should not cut corners even if they believe they have client approval.
Joseph Woitkoski, who was terminated by Raymond James Associates in 2018 after 20 years as a registered rep, was suspended for 30 days and fined $7,500 for allegedly making discretionary trades for 12 customers without their written authorizations, according to an acceptance, waiver and consent letter that Finra accepted on August 20.
Finra imposed the sanctions even though “over the course of longstanding relationships, the customers gave authorization to Woitkoski to exercise discretion in their accounts,” according to the letter that the Massachusetts-based former broker signed without admitting or denying the findings. Eight of the 12 customers were “seniors,” according to Finra.
Woitkoski also mismarked trading orders as “unsolicited” on about 120 of the approximately 900 trades he made over 19 months, it said. Raymond James discharged him two years ago after he admitted executing “unauthorized” trades in multiple accounts, according to his BrokeCheck history.
“I have retired from the securities business and will not be associated with any Finra member in any capacity in the future,” Woitkoski wrote in a “corrective action statement” attached to the consent letter.
Woitkoski, who spent the first 12 years of his brokerage career with UBS and Merrill Lynch before joining Raymond James in 2010, earlier this year stepped down as chairman of Berkshire County Arc, an organization that provides job training and life skills to children and adults with developmental disabilities. Mary Courtner, his Pittsfield, Mass.-based lawyer, did not immediately return a call for comment about the Finra agreement.
Finra last Thursday also imposed a $5,000 fine and four-month suspension on Christopher Hildebrandt, a former independent broker in Cape May Court House, N.J., who had been affiliated with Principal Securities for more than 15 years, according to his BrokerCheck history.
Hildebrandt falsified about 90 new account forms, money transfer requests and distribution forms over eight years by “reusing client signatures and using correction fluid to alter” dates, account numbers and dollar amounts, according to the consent letter he signed without admitting or denying the findings.
Finra acknowledged that he altered the paperwork as “an accommodation to approximately 30 customers” and said “the underlying transactions were all authorized.”
Hildenbrandt’s practices, however, continued even after Principal Financial warned him in a 2015 phone call and “letter of education” that he was violating procedures, according to the consent letter he signed that Finra accepted last Thursday.
Principal discharged Hildebrandt in October 2018 after a client’s son accused him of misappropriating funds from his mother’s trust and making one or more unauthorized transactions. (The complaint was settled in September 2018 for $15,095, according to Hildebrandt’s BrokerCheck record.)
Hildebrandt first registered as a rep in 1998 with Morgan Stanley, but spent 17 years of his 20-year brokerage career with insurance firm-affiliated broker-dealers, according to his BrokerCheck history. He is not currently registered as a broker or advisor, and could not be reached for comment.
Both Hildebrandt and Woitkoski attracted the Finra sanctions because they violated the industry self-regulator’s far-reaching Rule 2010, which requires brokers to “observe high standards of commercial honor and just and equitable principles of trade.”
In a third action, Finra on Thursday said it will impose a $5,000 fine and ten-day suspension on former Raymond James & Associates broker Stephen P. Florio for allegedly trading in a single customer account without receiving written authorization from the customer.
“Due to the customer’s business and travel schedule, the customer orally authorized Florio to exercise discretion,” the consent letter said.
Florio inaccurately attested in two annual compliance questionnaires that he was not using discretion, it said, echoing the Woitkoski letter, and he did not receive RayJay’s permission to make the account discretionary.
Raymond James discharged Florio two years ago over suspicions that he was conducting an unapproved outside business activity and concern about his investments in low-priced securities that he may have discussed with someone close to senior management, according to his BrokerCheck history. Florio’s regulatory record says he denied both allegations.
Florio, whose 36 years of brokerage experience includes stints with Morgan Stanley and Bank of America, is currently an independent broker in Fort Lauderdale with Cambridge Investment Research, according to his BrokerCheck history. He signed the Finra consent letter without admitting or denying the findings.