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Regulation and Compliance > Federal Regulation

FINRA Fines Ex-Waddell & Reed Broker Who Took Client Info to Securities America

By Jeff Berman

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What You Need to Know

  • Reps are often sanctioned by FINRA for taking clients' info with them when they change firms.
  • The former Waddell & Reed broker and advisor violated FINRA Rule 2010, the regulator says.
  • Waddell & Reed and Securities America are rival broker-dealers that have been gobbled up by larger rival BDs.

A former Waddell & Reed broker and financial advisor was suspended for 10 days and fined $5,000 by the Financial Industry Regulatory Authority for allegedly taking nonpublic personal client information from the firm without the knowledge or consent of the clients or firm after accepting a job with Securities America, according to FINRA.

Without admitting or denying the regulator’s findings, Michael Keith Napier signed a letter of acceptance, waiver and consent on March 4 in which he consented to the imposition of FINRA’s sanctions. FINRA signed the letter Friday.

Although FINRA did not mention Waddell & Reed by name in the letter, Napier’s report on FINRA’s BrokerCheck website says he was with the firm from 2009 to 2019, before he left to join Securities America. He is still affiliated with Securities America and registered as an advisor and broker.

Securities America became owned by Advisor Group after that firm’s acquisition of Ladenburg Thalmann in 2020. LPL Financial said in late 2020 it was acquiring Waddell & Reed’s wealth management unit.

Advisor Group, LPL, Waddell & Reed and Mark McFarland, an attorney at Hinkle Law Firm, who represented Napier in his dispute with FINRA, did not immediately respond to requests for comment on Monday.

More Details

FINRA started investigating Napier’s alleged actions at Waddell & Reed based on a customer complaint made to FINRA, it said in the letter.

In September 2019, after accepting an offer to join Securities America, “Napier improperly removed from the member firm through which he was then registered nonpublic personal information concerning 285 customers and 728 accounts, without his firm’s or the customers’ knowledge or consent,” FINRA alleged.

“Specifically, Napier shared his customers’ nonpublic personal information, including, among other items, dates of birth and social security numbers with a third-party vendor, which the vendor used to populate forms to assist him with transitioning customers to Securities America,” according to FINRA.

As a result of his actions, “Napier caused his then-member firm to violate Regulation S-P, and in doing so,” he violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), the regulator alleged. Under the SEC’s Regulation S-P, firms are required to have policies and procedures that address the protection of customer information and records.

Jeff Berman

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