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.
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.
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.