Documents describing a bank broker's settlement with securities regulators offer a rare glimpse into what can go wrong inside a bank brokerage.
Last fall, Jamai Wallis Weber, a broker at Worthen Bank, Little Rock, agreed to penalties stemming from charges of improper sales practices, including the use of misleading sales letters, or mailers.
She settled the charges against her without admitting or denying guilt, and was censured and fined $70,330 by the National Association of Securities Dealers last November.
St. Louis-based Boatmen's Bancshares subsequently purchased Worthen and recently agreed to reimburse customers of Ms. Weber and another broker for undisclosed sums, Arkansas securities regulators said.
Below are excerpts from Ms. Weber's September 1995 statement to the NASD, which was accepted as part of her personal settlement with the industry watchdog group.
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I understand and accept that the mailers referenced in my letter of acceptance, waiver, and consent contain certain misleading statements. In hindsight, I wish I had not sent the mailers in question. However, I have accepted responsibility for my actions by agreeing to the sanctions set forth.
I did not knowingly or intentionally commit the violations described in my letter.
My entire securities career was spent with Worthen Investments Inc. Until Aug. 1, 1995, I had never been employed in the securities industry in any environment other than a bank brokerage business.
I began my work with Worthen Bank as a teller in 1983. I became a trading assistant to a registered representative of Worthen Investments in 1987. Shortly thereafter, I took the Series 7 examination.
After I had been a trading assistant for a year with Worthen Investments, I was promoted to the position of broker.
For the next eight years, I did my best to serve my clients honestly and loyally.
I now know that the training I received as a broker with Worthen Investments was woefully inadequate. I also believe the compliance procedures and supervision of brokers in general by Worthen Investments was inadequate.
This has been made very evident to me by my examination of the training, compliance, and supervision procedures of Hill, Crawford & Lanford, a firm I joined in August 1995.
Mailers came into general use among the brokers at Worthen Investments in the early 1990s. Actually, my mailers were held up as an example to the other brokers as the kind of mailers that all of us were encouraged to compose and send to our clients.
The only requirement at Worthen Investments concerning the use of mailers was that they had to be approved in advance by a principal of the firm.
I always adhered to this rule. All of my mailers, including the ones at issue, were approved in advance by a principal of the firm.
At the time I prepared these mailers, I thought my compliance with the internal procedures at Worthen Investments would insure that these mailers complied with all applicable requirements of state, federal, and private regulatory agencies.
To my profound regret, this was not the case. For instance, I did not routinely include a prospectus with my mailers because I never knew that it was necessary.
It goes almost without saying that I have learned a great deal about the requirements for advertising materials. Part of the fault for my violations concerning these mailers was my own lack of understanding of the risks of closed-end bond funds.
I intend to avoid future, similar violations concerning closed-end bond funds by requalifying as a registered representative, by understanding these products thoroughly before selling them in the future, and by reading and understanding the offering statement and prospectus for any closed-end bond fund before I sell it.
Finally, I believe the major cause for my violations was the inadequate training, supervision, and compliance support I received at Worthen Investments. I firmly believe these violations would not have occurred if I had been associated with a nonbank brokerage house.
In the future, once my suspension ends, I will be associated with Hill, Crawford & Lanford. My new firm has the training and supervisory procedures in place that will prevent similar violations in the future.
I am deeply embarrassed by the violations because they reflect my own lack of knowledge or understanding.
I hope to be in this business for a long time, and I know that cannot occur if I commit similar violations in the future.
