FINRA Sanctions Rep Over Fidelity Computer Equipment Purchase Assistance Program

We know that FINRA has been investigating numerous individuals who had worked at Fidelity, in connection with a benefit program they maintained, the Computer Equipment Purchase Assistance Program, which would allow employees to seek partial reimbursement for a personal computer purchase or related items every few years.

Last week, on February 7, 2019, FINRA accepted a settlement from a former registered person who was registered with Fidelity Brokerage Services, LLC.

According to the information in the settlement document – which is limited – here’s what we know with respect to this case:

In August 2016, the rep. (who according to BrokerCheck worked in Jacksonville, Florida) purchased over $10,000 of computer equipment and then filed for reimbursement, receiving the maximum benefit allowed of $2,000.

Then, three other Fidelity employees provided the rep. with their online credentials.The rep. purchased over 10K of equipment, and filed for reimbursement through another employee’s login and password.He did this for each of these three other employees.After filing for reimbursement he canceled the order or returned the equipment.

The other employees were reimbursed the $2,000 from Fidelity, and each paid the rep. a portion of what they received – from the three employees, FINRA says that the rep. received a total of $3,700.

FINRA reports that once Fidelity started an investigation into this matter, the rep. advised one of the employees to lie to company investigators, specifically, to advise them that she had the computer which was purchased, when the rep. had actually returned the equipment after filing for reimbursement.

The rep. settled this matter through an AWC, a Letter of Acceptance, Waiver and Consent, in which he neither admitted or denied the findings, but agreed to FINRA’s entry of the order against him, and to a sanction. In this settlement, FINRA made findings that the rep. converted funds of the company for which he was not entitled, and that conduct violated FINRA Rule 2010. In terms of sanctions, the rep. agreed to be barred from association with any FINRA member firm in any capacity. So, he’s out of the securities business. As an aside, according to BrokerCheck, he has not been registered with another firm since he left Fidelity in February 2017.

This is a settled case, and not a hearing panel decision that came after an evidentiary hearing.

I was not involved in any manner in this case, but in looking at the AWC, it strikes me that one might argue that this case seems to be more serious than other potential cases that FINRA may be investigating, in that this rep. worked with others in a coordinated fashion to seek reimbursement for items that were bought and then returned or canceled and also encouraged another rep. to lie to company investigators about the matter. Those factors seem to raise the stakes in this case, and it is not hard to imagine why FINRA wanted to boot this person from the industry.

It does not appear that as of now, there have been any other cases brought by FINRA involving the computer equipment purchase assistance program. At this point, we don’t know yet how FINRA may seek to handle other cases involving concerns with the computer equipment purchase assistance program, but time will tell.

Related posts:

Information for a FINRA Examination Concerning Computer Reimbursement Program – December 19, 2017

Update for Fidelity Employees Terminated Due to Computer Reimbursement Benefit Program – June 1, 2018