FINRA Suspends Ex-Wells Fargo Rep Who Borrowed $16K From Client
The broker then falsely claimed he did not engage in any such arrangement, the regulator says.
The Financial Industry Regulatory Authority suspended an ex-Wells Fargo broker for two months from association with any FINRA member in all capacities after he borrowed about $16,000 from a customer of the firm without notifying Wells Fargo, violating FINRA and Wells Fargo rules in the process, according to the regulator.
Without admitting or denying the findings, Paul Liebman signed a letter of acceptance, waiver and consent May 1 in which he agreed to FINRA’s suspension and a $5,000 fine. FINRA accepted the letter Tuesday.
Wells Fargo declined to comment Wednesday and there was no attorney representing Liebman listed on the AWC letter.
In 2014, Liebman became associated as a general securities representative with Wells Fargo Advisors Financial Network, according to FINRA. However, in February 2019, the firm filed a Form U5, reporting that it terminated Liebman’s association with the firm, effective Jan. 18 that year, because Liebman borrowed money from a customer.
Wells Fargo’s written procedures prohibited its registered persons from borrowing money from its securities customers, with the exception of immediate family members, according to the AWC letter. The customer he borrowed money from in 2017 was not a member of his family, FINRA said, noting he also did not notify the firm about the loan and did not receive the firm’s approval for it.
Liebman also “falsely stated on a Firm compliance questionnaire in 2018 that he had not engaged in any lending or borrowing arrangement with any Firm customer,” according to FINRA.
As a result of his conduct, Liebman violated FINRA Rules 2010 (governing standards of commercial honor and principles of trade) and 3240 (governing the borrowing from or lending to customers), FINRA claimed.
According to Liebman’s profile on FINRA’s BrokerCheck website, the customer Liebman borrowed the money from claimed the money was still owed, but settled the dispute in 2018 for $8,674. There are two other disclosures on Liebman’s profile: One for the separation from Wells Fargo and the other a notice that FINRA suspended him Feb. 7 this year for failure to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance. He is no longer registered as a broker or RIA, according to BrokerCheck.