Former Credit Union Adviser Fights FINRA Claim
A year after FINRA suspended and fined a financial adviser who previously worked at a credit union for secretly downloading confidential, member information before taking another job at Wells Fargo, the defendant has appealed the decision.
According to a March 2013 FINRA Hearing Panel Decision, Steven Robert Tomlinson violated NASD Conduct Rule 2110 when he downloaded the information to his personal flash drive without authorization and then gave personnel at Wells Fargo access.
The information included the social security numbers and account numbers, account balances of more than 2,000 members, according to the FINRA claim. Tomlinson then gave the flash drive to an administrative assistant at his new firm to use in assisting him to contact clients. He did not supervise her use of the flash drive, the regulator said.
While the credit union was not named in FINRA’s claim, it was noted that the financial institution is based in Corning, N.Y.
CU Times searched the NCUA’s database of credit unions and found only one based in that city – the $1 billion Corning Credit Union. Several calls were made to the credit union Monday to confirm or deny its involvement with Tomlinson, but at press time, were not returned.
“(The administrative assistant) and other personnel at the new firm had unfettered access to the files on the flash drive and were never warned that confidential, non-public information was on it,” the FINRA claim read. “The flash drive was unencrypted and not password-protected.”
The administrative assistant took the flash drive with her overnight to a hotel and used it the next morning at the new firm, leaving it plugged into a computer in a public reception area until sometime in the afternoon, according to FINRA. She testified that technology personnel at the new firm had to access that computer remotely to help her use the flash drive. At least one of the downloaded files was later found on a secretary’s computer at the new firm.
The credit union launched an investigation when it received information on what may have transpired, according to FINRA. When Tomlinson learned of the investigation, he admitted he deleted the confidential, non-public member files that he had downloaded. He stopped deleting them after an attorney for his new firm told him to stop.
In the credit union’s compliance manual, financial advisers were prohibited from transmitting such non-public personally identifiable information to a third party except for business purposes and with the client’s consent, FINRA said. Tomlinson also had a signed agreement with the credit union not to disclose non-public customer information.
Before Tomlinson joined his new firm, he was told he was not permitted to bring with him customer account information similar to what was on the flash drive. Tomlinson told neither firm about the confidential non-public information he downloaded nor did he obtain permission from any of the customers and members whose information he downloaded.
“Tomlinson mainly argues that he was thoughtless, but that he meant no harm,” according to FINRA. “He also contends that, in any event, no harm was done because only the names and addresses of his own clients were used to create address labels for ‘tombstone’ announcements of his move to his new firm.”
In March 2013, FINRA suspended Tomlinson for 10 days and was fined $10,000. After an independent review of the case, his suspension was extended to 90 days. In April 2014, Tomlinson filed an appeal with the SEC.
According to FINRA, Tomlinson began working at the Corning, N.Y.-based credit union in 2001. He became a manager of the investment services group in 2003 and in November 2008, at the time of the alleged misconduct, was affiliated with Raymond James Financial Services Inc., a FINRA member firm. Tomlinson was an employee of both the credit union and RJ Financial.
In October 2008, he left the credit union, and in November 2008, just prior to Thanksgiving, he resigned to joined what was then Wachovia. At the time of the FINRA hearing, Tomlinson was still working for the successor to Wachovia, Wells Fargo, and was registered with FINRA through that firm.
According to FINRA, Tomlinson left the credit union because he was dissatisfied with the salary system and wanted to build a business to leave to his son. The new position at Wachovia offered a small payment for managing the branch but the potential for much greater compensation in the form of commissions.
CU Times searched Corning CU’s “Straight Talk” newsletters on its website going back to the spring and summer of 2008 and found that its CCU Investment Services division had changed its name to CCU Wealth Strategies, according to the fall/winter 2011 edition.
“Rest assured that the only thing that will be changing is the name. Every day, the CCU Wealth Strategies team is your connection to a full breadth of products and services that can be tailored to suit your unique circumstances, the newsletter read, noting that its broker-dealer Raymond Financial Services is not affiliated with the credit union or CCU Wealth Strategies.