← Broker database 2025-01-08
Fidelity Brokerage Services Fined $600,000 for Supervision Failures Leading to Employee Theft
According to FINRA, Fidelity Brokerage Services LLC has been censured and fined $600,000 for failing to have reasonably designed systems to supervise associated persons' access to stock plan services (SPS) account data.
The supervision failures allowed an associated person to convert approximately $750,000 from international plan participants. The individual, who was later barred by FINRA and criminally sentenced, was able to access and change SPS account data without detection because the firm did not monitor for or prevent changes made outside its workflow management tool.
The individual changed international plan participants' names to his own or to accounts he controlled, then linked these accounts to banking instructions he controlled. When account data was changed, plan participants appeared to be employed by multiple companies in various industries, but the firm failed to investigate these anomalies.
Additionally, outgoing money movements from international SPS accounts were not included in any firm surveillance program, allowing unauthorized checks and wire transfers to proceed without review.
The firm discovered the misconduct only after an international plan participant contacted them with questions about transfers from his account. Fidelity terminated the individual, reported to FINRA, and made full restitution to affected plan participants.
This case demonstrates why robust internal controls and surveillance are essential. Investors should know that firms have obligations to protect customer data and monitor for suspicious activity.