Financial industry regulators have sanctioned two people who worked at brokerages in central Indiana for various transgressions and are seeking to punish a third individual.
The Financial Industry Regulatory Authority handed down a lifetime ban for former Hilliard Lyons registered sales assistant Kelsey Marie Molyet, according to its May disciplinary report, claiming that the Indianapolis resident falsified documents and impersonated customers. The ban means she can't work for any FINRA member in any capacity again.
FINRA suspended former Merrill Lynch securities broker Harold Joseph Petro, of Greenwood, for six months and fined him $15,000 for making client trades without their authorization, records indicate.
Regulators also initiated a disciplinary proceeding against Indianapolis resident Jay Christopher Hatton, formerly of CFD Investments Inc. The case, which stems from his alleged failure to disclose past felony charges, was launched because Hatton didn't cooperate with FINRA's investigation.
FINRA said both Molyet and Petro accepted their penalties without admitting to or denying the findings. Molyet, Petro and Hatton were all terminated by their respective firms, and IBJ's attempts to reach them for comment were unsuccessful.
Hilliard Lyons and CFD declined to comment, while Merrill Lynch representatives didn't immediately reply to requests for comment.
According to FINRA, Molyet worked in the Bloomington office of Hilliard Lyons from July 2009 until August 2014, when the firm fired her for "impersonat[ing] clients on more than one occasion and "provid[ing] altered documents .... on more than one occasion."
Her violations took place from May to July in 2014, FINRA said, and they involved clients' accounts with third-party financial firms that manage 529 college-savings plans. She intended to prove to at least two customers that she had made their requested transfers, regulators said, even though she didn't.
That May, regulators said, Molyet called an undisclosed third-party firm and told an agent she was "customer E.M. when in fact she was not." While on the phone, she argued that she had made $5,000 balance transfers in both 2012 and 2013 from the client's Hillard Lyons account into the 529 account. Molyet asked for account statements for those periods, but was told there were no such records.
FINRA said that the following month, Molyet falsified a customer's check to reflect that a $5,000 balance transfer had occurred, taking an old check and modifying dates and account numbers.
She then emailed that check to the client's accountant, officials said, "intending to deceive him and the customer into believing she had made a $5,000 balance transfer into the customer's 529 account."
Molyet also altered account statements, officials said, to show such transactions were made. She did the same thing with at least one other client, FINRA said. She also lied to regulators when they initially asked her about the documents, regulators said, claiming she didn't alter documents but merely forwarded altered documents from the third-party firm.
Molyet is a 2008 Michigan State University graduate, according to her LinkedIn profile, and worked in the Indianapolis office of commercial real estate firm Cassidy Turley after Hilliard Lyons fired her. Officials at Cushman Wakefield, which assumed Cassidy Turley through mergers, said Molyet was never an employee of the firm, but worked there for a "brief time" as a temp.
Other disciplinary actions
Petro, the Merrill Lynch broker, worked out of its Indianapolis office from November 1978 until March 2014, when he was terminated for conduct including "failure to contact clients in advance of entering orders," the investment bank said in a regulatory filing.
In December 2013 and January 2014, FINRA said, Petro made multiple trades in four customer accounts without written authorization. He also improperly marked some trade-order tickets as unsolicited, officials said, when in fact he initiated those trades..
It's unclear whether Petro is currently employed.
Hatton had worked at CFD Investments for 10 years when the firm fired him in March 2014. He had been in the industry since joining New York-based Lehman Brothers Inc. in 1993. Hatton's employment status also is unclear.
FINRA said that Hatton on annual questionnaires failed to disclose multiple felony charges (none of which led to felony convictions) and a 2005 misdemeanor plea deal for resisting law enforcement, for which he served jail time.
Hatton also didn't disclose, as he should have, a nearly $5,000 civil court judgment against him from 2007, regulators said, and a roughly $72,000 tax lien on his Marion County home. His employer found out about his criminal charges from a background check in 2014.