A former representative for Raymond James & Associates (RJA) was penalized for taking confidential client information with him when he departed for another firm, Think Advisor reports.
The Financial Industry Regulatory Authority fined Sam Calvin Nevels for four months and fined him $10,000 for his conduct.
From September 2012 to September 2023, Nevels was registered as a General Securities Representative through an association with Raymond James before resigning to join Piper Sandler.
FINRA found that between June and September of 2023, after beginning negotiations with the new firm, Nevels sent over 30 unencrypted emails to his personal email address. “These emails contained, among other things, institutional client information, including contact lists generated from the firm’s customer contact system, presentations made to customers, and details of transactions that customers were considering,” FINRA stated in its settlement letter. “For example, on August 22, 2023, Nevels sent to his personal email address information related to an investment strategy and a list of RJA clients who were prospects for the strategy.” The information “was directly relevant to Nevels’ new position, and he accessed some of the information after moving to the new firm,” the order continues.
It was also determined that Nevels also printed and retained documents containing RJA’s confidential and/or proprietary information and retained five photographs of information on RJA’s computer system screens and four screen shots of firm emails, three containing client contact information and one with details of an RJA investment product. Furthermore, he was found to have altered information in RJA’s contact management system by deleting certain information and replacing it with false information.
“Changing the client contact information caused inaccuracies in RJA’s contact management system and could have made it more difficult for RJA to reach out to the clients before the departing representatives had a chance to contact them,” the order states. “In each instance where Nevels changed a client’s contact information, the new information was incorrect.”
Within days of starting at his new firm, FINRA stated that Nevels accessed some of the improperly removed materials, including a client contact list and a presentation he and another representative created for a client while they were at RJA, using the new firm’s email system. Nevels also entered some contact information from the materials into his new firm’s customer relationship management software.
On September 11, 2023, RJA filed a Form U5) disclosing that Nevels had voluntarily terminated his association with the firm. Several weeks later, the firm filed a Form U5 amendment stating that it initiated an internal review concerning Nevels’ “potential retention and transmission of confidential firm information and client information; potential conduct inconsistent with firm policies on document integrity.”
In January 2024, RIA filed a Form U5 amendment disclosing that Nevels “retained and transmitted confidential and proprietary firm information and confidential client information, and that [Nevels] altered customer information in firm records.”
By falsifying firm records, Nevels violated FINRA Rule 2010. Additionally, by causing the firm ‘s books and records to be inaccurate. Nevels violated FJNRA Rules 4511 and 20l0.
FINRA Rule 2010 requires associated persons and member firms to “observe high standards of commercial honor and just and equitable principles of trade” in the conduct of their business.
FINRA Rule 4511 requires that:
(a) Members shall make and preserve books and records as required under the FINRA rules, the Exchange Act and the applicable Exchange Act rules.
(b) Members shall preserve for a period of at least six years those FINRA books and records for which there is no specified period under the FINRA rules or applicable Exchange Act rules.
(c) All books and records required to be made pursuant to the FINRA rules shall be preserved in a format and media that complies with SEA Rule 17a-4.
Nevels did not admit or deny FINRA’s findings but accepted and consented to them.
At Hyman Cotter PC, we represent clients nationwide who are the victims of unauthorized trading, breaches of fiduciary duty and other forms of financial adviser misconduct and securities fraud. Our team of lawyers brings a diverse range of knowledge and experiences to our clients’ cases. If your financial adviser made trades without your consent, you may be able to pursue a lawsuit to recoup your losses. We’ll help you understand your rights and options. Contact us at 312-291-4600 or email our team to learn more.
