FINRA decision to bar broker over deposit of over $1 million upheld after appeal

On Behalf of | Oct 15, 2021 | Broker Misconduct

The Financial Industry Regulatory Authority has upheld an earlier decision to bar a broker for misconduct involving the transfer of funds, Think Advisor reports. Thomas Lee Johnson, a former broker with RBC Capital Markets, allegedly deposited over $1 million that was received in error from his RBC firm account into his personal bank account.

A FINRA hearing panel barred Johnson from associating with any FINRA member firm, and that ruling was affirmed last week by the authority’s National Adjudicatory Council.

The case dates back to 2016, when Johnson inherited 60 shares of Doosan Heavy Industries and Construction, a South Korean company. As of October 2017, the shares were valued at $939. When RBC liquidated the shares the following month, FINRA said the sales were incorrectly priced in U.S. dollars instead of South Korean currency. Because of a system error, $1.06 million went into Johnson’s firm account when he was entitled to just under $1,000, according to FINRA.

At that point Johnson allegedly transferred the money into his own bank account and only returned the funds after seeing that RBC had canceled the transaction, causing a negative balance in the firm’s account. FINRA terminated Johnson for violating its code of conduct and he was barred in 2019 by FINRA’s hearing panel.

Johnson appealed the decision but the adjudicatory council has now stated that its review of the record showed there was not substantial evidence to overturn the hearing panel’s determination.

The council said Johnson’s claims that he believed he was entitled to the money and did not realize RBC had erroneously credited the funds were without merit.

At Lewitas and Hyman, our Chicago-based FINRA investigation lawyers understand the complexities involved when financial professionals are the subject of a regulatory inquiry, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact us at (312) 291-4600 or through our online contact form for a free consultation.

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