In almost all the cases, workers flouted rules requiring an outbound telephone call to confirm the transaction. Making it worse, many signed forms saying that they had spoken with the customer when the only communication they had was by e-mail.
Debra Ferrara, a former client service associate at Morgan Stanley Smith Barney, falsified forms for five wire transfers totaling $108,680, saying she'd spoken with the client when she hadn't. Morgan Stanley fired her and reimbursed the client, said spokesman Bruce C. Dunbar. Ferrara, who did not respond to messages sent via LinkedIn, settled her case with FINRA in September.
John J. Arnold, a former Merrill Lynch broker in Newport Beach, California, took the bait on two fraudulent wire requests that came in by email, falsely representing to a sales assistant that he had verbally confirmed transactions totaling $127,200 with his customer, according to FINRA.
The imposter said he couldn't speak on the telephone because he was headed to a board meeting. In a settlement with FINRA in June 2016, the broker agreed to a 60-day suspension and $15,000 fine.
He said in his public FINRA records that the firm hadn't given him "meaningful training" in wire transfer security, yet FINRA said in the settlement that he had certified he understood the wire transfer policies. He did not respond to messages left at his office and sent via LinkedIn. Merrill spokesperson William Halldin said the settlement agreement "speaks for itself." The customer was reimbursed.