Dec 4 (Reuters) - A brokerage worker who alters documents to hide a mistake may face harsher consequences for the cover-up than for the original misstep.
Three disciplinary cases recently resolved by the Financial Industry Regulatory Authority make that point clear. In all, Wall Street’s industry-funded watchdog levied suspensions and fines against brokers and other brokerage staff for changing documents that they knew were about to get a closer review by compliance staff or lawyers.
The penalties were probably far worse than what the staffers would have faced if they had left the documents alone, securities lawyers said.
FINRA’s disciplinary findings illustrate a practice that is more prevalent on Wall Street than the number of disciplinary cases involving it suggest, said Jonathan Uretsky, a securities lawyer in New York. Brokers, trainees and other securities professionals who change documents, such as instructions their clients sign, often do not know the rules.
“In their mind, it’s no harm, no foul,” Uretsky said.
That is, until regulators become involved.
In one case, Ameriprise Financial Inc broker David Tysk of Eden Prairie, Minnesota, is appealing a three-month suspension and a $50,000 fine that FINRA imposed in October, his lawyer said last week. FINRA said Tysk altered notes about his conversations with Guenther Roth before giving them to the now-former client’s lawyer to review for a 2009 arbitration.
A key issue in FINRA’s decision: Neither Tysk nor Ameriprise revealed the alterations to Roth or his lawyer during the arbitration. The client had alleged that Tysk advised him to buy a risky $2 million annuity, according to an Oct. 13 ruling.
Tysk “did nothing wrong, and he expects to win on appeal,” said his lawyer, Brian Rubin. The broker continues to serve his clients, Rubin said.
Roth’s lawyer, Thomas Jamison in Minneapolis, suspected the notes had been changed because they seemed “contrived” and “extraordinarily complete,” according to FINRA. A forensic examination of Tysk’s computer later confirmed the alterations, according to FINRA.
Ameriprise and Tysk did not deny changing the notes but said the broker did so “to make them more accurately reflect” the conversations with Roth.
FINRA also censured and fined Ameriprise $100,000 for its misconduct. A spokesman for the firm said it was not appealing the decision.
Changing documents also tripped up Susan Ann Curnyn, formerly part of a New York branch office compliance group for a UBS AG unit, and her supervisor, Jennifer Lo Grasso, a former administrative manager. FINRA disciplined the two in separate cases.
They had learned in 2012 that marketing materials the branch was to submit for a compliance audit by UBS staff were missing required disclosures and other details, according to Nov. 10 FINRA disciplinary documents.
Curnyn worked with other UBS employees to add the information, and she and Lo Grasso gave the auditors the retooled materials, leading them to believe they were reviewing the originals, FINRA said.
Lo Grasso and Curnyn, who no longer work in the securities industry, both settled their cases with FINRA without admitting or denying the allegations, documents show.
Lo Grasso agreed to a three-month suspension and $10,000 fine, and Curnyn, to a two-month suspension and $5,000 fine.
A UBS spokesman and Curnyn’s lawyer declined to comment. Lo Grasso, reached by telephone, said the allegations were false. (Reporting by Suzanne Barlyn; Editing by Tim McLaughlin and Lisa Von Ahn)