Finra Suspends Ex-Jones Broker over DIY Customer Settlement
The Financial Industry Regulatory Authority has fined and suspended a former Edward Jones & Co. broker in Kansas who attempted to settle a customer complaint on his own, according to a settlement letter.
Topeka-based broker Michael A. Erwin allegedly wrote a $2,500 check out of pocket to resolve a complaint from a customer who claimed she lost money after he failed to close an account in time as the market was tanking in March. The customer had instructed Erwin to close her account by March 10, but he did not close the account until March 17, according to the settlement.
Finra imposed a 10-day suspension and $2,500 fine against Erwin for violating its ‘catch-all’ Rule 2010, which requires brokers to act with “high standards of commercial honor,” according to a letter of acceptance, waiver and consent issued by Finra.
Erwin, who has been registered since June as a broker and investment advisor with Madison Avenue Securities, according to BrokerCheck, could not immediately be reached for comment.
The sanctions are relatively light and may reflect the fact that the broker had good intentions, lawyers said. But Finra prohibits brokers from settling directly with clients because it can cause books-and-records violations for their broker-dealer if the firm is not able to properly report customer complaints and resolutions, according to Debra Jenks, a securities lawyer in West Palm Beach, Florida.
“It’s a slap on the hand to send a message and the rep should have just known better,” said Jenks, who was not involved in Erwin’s case.
Finra last year imposed a $5,000 fine and 15-day suspension against a former Morgan Stanley broker in California who made an off-the-books settlement over an investment recommendation that had gone awry.
In this case, Edward Jones was aware of the customer complaint but did not know about the settlement, according to the AWC.
Jones discharged Erwin on April 8 over concerns that he “attempted to resolve a customer complaint without the firm’s knowledge.”
He started his career in 2017 at Jones, according to the database.