FINRA has suspended a former U.S. Bank broker for six months and slapped her with a $10,000 fine for borrowing $10,000 from a 69-year-old customer, according to a hearing panel decision posted on the regulator's website.
Katherine Ann White claimed that the money she received was not a loan but rather the proceeds from the sale of her tractor to the customer, an argument that failed to persuade the hearing panel.
White did not try to deliver the tractor to the customer nor was there a bill of sale or written contract, the panel said in its decision. Furthermore, the customer had not seen the tractor and did not know what kind of shape it was in, it noted.
"White's defense is not supported by the law or the evidence," the panel wrote.
White, a rep with U.S. Bank in Minneapolis, was aware that loans from customers were prohibited by U.S. Bank as well as FINRA. During the hearing, she claimed that she accepted the customer's $10,000 cashier's check in October 2014 after the retiree agreed to buy her tractor "purely as an investment."
White testified that she later repurchased the tractor, paying the customer $10,600 over six months in monthly installments. She threw in an extra $600 as the customer's "profit in the tractor," she said.
White also claimed during the hearing that her plan was to sell the tractor to the customer and then, on behalf of the customer, sell it to her hay man and turn all of the sale proceeds over to the customer, according to the decision.
"The evidence shows that White's real plan was to borrow $10,000 from the customer, make the loan look like the sale of her tractor, sell the tractor to the hay man and, from the sale proceeds, pay the customer back the $10,000 plus a 'profit' to be determined by White," the panel wrote in its decision.
U.S. Bank found out about the $10,000 cashier's check in April 2015 after the customer's daughter complained to the bank. She wanted to know why her mother purchased a tractor from White.
White could not be reached for comment.
White worked for U.S. Bancorp Investments from December 2001 to April 2015, when she was discharged, according to BrokerCheck records.
"The trust and confidence of our clients is of utmost importance to U.S. Bank and its affiliate U.S. Bancorp Investments," Robin Francis, a spokeswoman for U.S. Bancorp Investments, said in a statement. "Upon investigating the allegation against this financial adviser, her employment was terminated and regulatory authorities notified."
White's six-month suspension takes effect on June 5, unless she appeals the panel's decision to FINRA's National Adjudicatory Council.
Register or login for access to this item and much more
All Bank Investment Consultant content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access