Finra punishes former Schwab broker for lying about role in $800,000 phishing scam

Regulator said Deming Payne failed to verify with customer imposter's instructions to wire money, and then lied about it.

Jan 11, 2019 @ 2:00 pm

By InvestmentNews

A former broker for Charles Schwab & Co. was fined $5,000 and suspended for 90 days by Finra for lying to Schwab about a phishing scam in which he wired nearly $800,000 to someone impersonating one of his customers.

Deming Payne, who resigned from Schwab in September 2017 after admitting that he violated firm policy regarding the documentation of outbound calls, is no longer employed in the securities industry.

(More:Finra updates cybersecurity best practices report)

The Financial Industry Regulatory Authority Inc., in its letter of acceptance, waiver and consent, said that in August 2017, Mr. Payne received requests via email from an individual posing as a customer to process eight wire transfers from the customer's account.

It said that Mr. Payne failed to obtain verbal verification of the instructions from the actual customer, who was unaware of the imposter's requests, even though the requests presented several red flags.

(More:Cyber assailants targeted in important new security sweep)

On five occasions, Finra said that Mr. Payne falsely attested to Schwab that he had obtained such verbal verification, noting that on another occasion, Mr. Payne instructed another Schwab employee to falsely attest that she had verbally verified one of the requests.

In total, wire transfers totaling $794,860 were made in response to the imposter's requests, Finra said.

A spokesman for Schwab said the company reimbursed the customer for all of the money lost in the cyberscam.

Mr. Payne began his career at Schwab in 2011, moved to Options Express the following year, and returned to Schwab in 2014.

Finra has made cybercrime prevention and punishment a priority, issuing investor alerts to inform the public about the problem and punishing brokers for involvement or laxity in connection with cyber fraud activities.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Female leaders highlighted as future of financial advice

InvestmentNews recognized 20 Women to Watch for their efforts to advance the financial advice industry.

Latest news & opinion

Securities America hit with lawsuit seeking $18 million in damages

Firm is dealing with the fallout from a rogue broker it fired a year ago.

Brian Block continues his legal fight to stay out of prison

A judge denied Mr. Block's motion for a new trial, but he wants another day in court.

10 social media stars you're not following yet, but should be

Some of the great people using social media to discuss wealth management and financial advice who might not be on your radar.

Wells Fargo could be putting more of its focus on wealth management

Speculation is mounting that the bank is dumping some lines of business to focus on just a few areas, including financial advice.

Choosing between a retroactive lump sum and a bigger monthly Social Security benefit

Some retirees can receive up to six months of back benefits.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print