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

Regulators' gloves are coming off with cybersecurity. Put up your dukes with these tips

Updated guidelines and some of the first-ever rule enforcements signal that regulators are getting serious about holding firms accountable for data breaches, according to special projects editor Liz Skinner and technology reporter Ryan Neal.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab: Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

Here's how advisory firms compensate their employees

Schwab’s report on RIA pay details median compensation for a range of positions

Raymond James buys Silver Lane Advisors, an investment bank for RIA mergers

Expanding unit taps into M&A trends in the wealth management space.

Final pass-through rules deliver good and bad news for advisers

The final regs are a boon to rental-property owners and some mutual fund shareholders, but some clients' deduction may be diluted.

Finra focuses exam priorities on investor-protection threats

Online distribution of private placements pops up; exchange-traded products cause suitability worries.

10 public companies that boosted their ESG ratings in 2018

These 10 companies increased their environmental, social and governance scores last year.

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