Impersonating Clients Yields Lifetime Bans for Advisor & Assistant
After Angela Marie Borchardt's advisory firm switched broker-dealers in May 2013, her boss handed her a list of female client names to impersonate by calling the former B-D and asking that it liquidate the client accounts.
"He called for the male clients, I called for the females," says Borchardt, who recently received a lifetime industry ban from FINRA for doing so -- as did her former boss, advisor Kenneth William Schulz. "It was impersonation."
Both Schulz and Borchardt had been with Main Street Investment Group, in Tomahawk, Wis., for over a decade when the firm moved from LPL Financial to Commonwealth, according to FINRA documents.
At the time of the transfer, Schulz reached out to his former clients to transfer their holdings, and they agreed, the FINRA documents say -- but then Schulz discovered that six clients could not simply transfer holdings, because their accounts held proprietary LPL funds. As a result, those clients would need to liquidate the holdings and then reinvest the proceeds in the new Commonwealth account.
"Rather than inform the customers that their securities could not be transferred in kind, Schulz directed a registered assistant at Commonwealth" -- that is, Borchardt --"to impersonate customers," Schulz's disciplinary hearing report noted.
Schulz could not be reached for comment; a home number listed for him was not in service.
Borchardt made the calls, according to her separate FINRA disciplinary report, then "attempted to conceal her conduct by falsely informing her supervisors at her new firm that the customers were on the phone with her during the calls and by asking one of the customers to falsely inform her new firm that the customer had participated in the phone call."
Schulz was banned in September by FINRA; Borchardt received her ban in October.
'I COULDN'T SAY NO'
Borchardt now acknowledges her career-ending mistake. "I just felt I couldn't say no," she says. "But I knew it was wrong."
She and Schulz split the calls by gender, she explains. The calls were a shortcut, she says, because some clients were elderly and out-of-state, and didn't easily understand the need for the change. "Not all of them had given their approval," she says.
"In my head I just wanted them all completed, to check it off my list and be done with it," says Borchardt, who now works for an insurance broker. "I wanted to get their funds to their accounts at Commonwealth. I had no intension to get my hands on it. I wanted their money to stay their money. I was not trying to be a schemer."
IBDs BACK AWAY
Main Street did not return requests for comment on the cases, and both LPL and Commonwealth have distanced themselves from the pair.
"We were made aware of the actions [Borchardt] took without the knowledge or consent of Commonwealth, and promptly undertook a full investigation, resulting in her immediate termination," Commonwealth states, adding that Schulz was terminated on July 16, 2013.
"At the time of the conduct at issue, neither individual was with LPL Financial," says Brett Weinberg, LPL Financial spokesman. "In addition, LPL did detect the suspicious activity and brought it to the attention of their new broker-dealer."
Borchardt, meanwhile, says her job frustrations had made her "bitter." Although she had passed her Series 7 and Series 66 exams, she was still working as a secretary, she says: "I guess I just wanted to get the job done and move on."