| Aug. 1
Aug. 1 A sales assistant can be one of a
broker's greatest assets or biggest headaches.
Great sales assistants often help boost brokers' income by
being the central contact point for clients and handling tasks
like processing orders and juggling paperwork. That leaves
brokers more time to develop relationships and bring in new
But there can be a downside: Sales assistants who break
industry rules or make costly mistakes may expose brokers to
problems with their employers and regulators, say lawyers. Even
if the firm and the broker aren't held liable, the behavior can
A spate of recent disciplinary cases against sales
assistants by the Financial Industry Regulatory Authority
(FINRA) - six since May - highlights what can go wrong. A
recurring theme: not calling customers to verify whether they
instructed the firm to wire funds from their accounts. Firms
recently faced a rash of incidents in which scam artists posing
as customers made wire transfer requests. Other cases in 2013
have involved assistants who forged client signatures on forms
and embezzled money.
FINRA, Wall Street's industry-funded watchdog, fined and
suspended the assistants and even barred some from the
securities industry. But brokers can be on the hook for
reimbursing the firm for their assistants' errors, according to
Tom Lewis, a lawyer for Stark & Stark in Lawrenceville, New
Jersey. Lewis routinely represents brokers whose firms want to
hold them financially responsible for trading errors their
assistants made, such as not selling a security when instructed
to do so.
Disciplinary actions against sales assistants are not
widespread, and many teams that bring in a lot of business view
their sales assistants as a force behind their success.
"There's a multitude of ways a sales assistant can create
liability or exposure for the team," said Lewis. "That is why
professional, competent sales assistants can be worth their
weight in gold."
A QUESTION OF SUPERVISION
Brokers at the largest U.S. firms, known as wirehouses,
typically share sales assistants as a group. The most successful
brokers - generally those who generate more than $500,000 to
$700,000 in sales - often have their own.
Licensed assistants typically earn a modest base salary from
the firm - often around $25,000 - and also can receive a
percentage of sales made by the broker or team they support.
Assistants in busy practices could earn $100,000, Lewis said.
Their responsibilities can extend far beyond clerical work,
especially for licensed sales assistants. Justine Richards, a
licensed assistant for Romano Brothers & Co, a wealth management
firm in Evanston, Illinois, does everything from doublechecking
bond bids and putting through orders to opening accounts, she
Some assistants buckle under the demands, especially when
being barked at by brokers, said Joe Romano, the firm's
president. That could lead to their taking shortcuts with
required procedures, he said.
Supervising sales assistants is typically the responsibility
of a brokerage's branch managers or operations manager - a
person who oversees the firm's administrative work. Nonetheless,
firms can still blame the broker for an assistant's mistakes or
misdeeds, such as sending clients the wrong form or improperly
completing certain paperwork, said Marc Dobin, a securities
lawyer in Jupiter, Florida, who represents brokers. "At the end
of the day, the buck stops with the broker for something created
by the sales assistant," Dobin said.
Brokers can get fired if the sales assistant's offense is
serious. Brian Buckstein, an employment lawyer in Wellington,
Florida, recently received calls from two such brokers, he said.
In one instance the assistant cut and pasted copies of
client signatures onto forms, Buckstein said. While the practice
was once common in the securities industry, it's forgery, and no
longer tolerated by regulators and most firms.
Brokers whose assistants hand them paperwork that does not
comply with industry rules could put themselves on the line,
It's unclear from recent disciplinary cases whether brokers
suffered consequences because of their assistants' misconduct.
Some situations would at least require restoring confidence
among clients, say lawyers.
Consider a June decision involving a former Wells Fargo
Advisors sales assistant who was duped into wiring a total of
$85,000 in client funds to an imposter who was posing as the
client. The assistant for the Wells Fargo & Co unit then
falsely documented that she verbally confirmed the wire transfer
requests with the client, according to the decision. She agreed
to a one-month suspension and $7,500 fine but did not admit or
deny FINRA's findings.
A Wells Fargo spokesman pointed to a part of the FINRA order
that notes the firm discovered the policy violations and took
appropriate steps to fix them. That included notifying FINRA and
reversing the transfer after the assistant became wise to the
While no money ultimately changed hands, such an incident
would doubtless be embarrassing for a broker to discuss with the
client. Putting the money back in the client's account is a
critical first step to restoring trust, said Benette Zivley, a
lawyer for Munsch Hardt Kopf & Harr PC in Austin, Texas, who
advises brokerages. Then, he said, it is time to acknowledge how
the firm dropped the ball.