Fidelity Brokerage Services, LLC will pay over $1 million relating to allegations that its lax supervisory measures failed to protect elderly clients from a woman posing as a Fidelity broker.
According to the Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA, “Between August 2006 and May 2013, Fidelity failed to prevent or detect the conversion of more than a million dollars from nine of its customers, most of whom were senior citizens, by a since-convicted felon named Lisa A. Lewis. This conversion went undetected in large part because at the time of Lewis’s unlawful acts, Fidelity had failed to establish and maintain adequate supervisory systems or written supervisory procedures . . . or to adequately review and monitor the transmittal of funds from customer accounts to outside entities.”
FINRA alleged that Fidelity failed to detect numerous “red flags” relating to the accounts Ms. Lewis established, including unusual money movement between the accounts and the fact that Ms. Lewis was listed on all of them as the beneficial owner.
Lewis, who was sentenced to 15 years in prison in June 2014 after pleading guilty to a criminal charge of wire fraud, pretended to be a broker with Fidelity after being terminated at another firm following allegations that she had improperly borrowed money from customers, according to the AWC. “By posing as a Fidelity broker, Lewis was able to obtain her victims’ personal information and use that information to open and control individual accounts in their names at Fidelity. . . . Using these means, Lewis eventually established more than 50 individual and joint accounts at Fidelity. She then systematically converted assets from a number of these accounts for her own personal benefit,” the AWC states.
Fidelity agreed to pay a $500,000 fine and will pay $529,270 in restitution to customers.
The disciplinary action is FINRA No. 2014041374401.
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