← Broker database 2025-01-29
Kenneth H. Nahrstedt Suspended for False Attestation Enabling $500,000 Fraudulent Wire
According to FINRA, Kenneth H. Nahrstedt has been fined $5,000 and suspended from association with any FINRA member for two months for submitting a false attestation that enabled a $500,000 fraudulent wire transfer.
The firm received an email from an imposter posing as a customer requesting a wire transfer to a bank in Mexico for the purported purpose of purchasing an apartment. To initiate the transfer, Nahrstedt signed a Change of Ownership form falsely attesting that he had spoken with the customer as required by firm policy.
In fact, Nahrstedt had not spoken with the customer. As a result of his false statement, the firm processed the $500,000 wire transfer from the customer's account to an unknown third party.
Wire fraud schemes targeting brokerage accounts are common. Firms implement verification procedures, including requiring verbal confirmation with customers, specifically to prevent unauthorized transfers. When representatives bypass these controls by making false attestations, they enable fraud.
This case illustrates both the importance of verification procedures and the consequences when they are circumvented. Investors should be aware that their firms should verify wire requests directly with them. If you receive confirmation of a wire you did not request, contact your firm immediately.