Former Morgan Stanley broker Nancy L. Johnson allegedly provided the firm's Greenwood Village, Colorado branch with false information on multiple occasions, resulting in a wire transfer of $86,000 from a customer account to an imposter who had hacked into the customer's e-mail account. As a consequence, FINRA suspended and fined Johnson $10,000, while Morgan Stanley terminated her employment.
The investigation states that Johnson (CRD #1743981), who served as a Senior Registered Sales Associate at Morgan Stanley, received a December 2015 message from a customer's e-mail address requesting the transfer of $86,000 from an account held at the firm, listing "TH Corp." as the beneficiary of the requested transfer.
FINRA noted that although this instruction contained incorrect routing information for the beneficiary bank, Johnson purportedly engaged in further written correspondence with the imposter, who this time sent an e-mail listing a different entity at a different bank—KDF, Inc.—as beneficiary.
According to the findings, Johnson then entered the wire request into Morgan Stanley's electronic disbursement system, falsely representing on a form that another firm employee had verbally confirmed the request with the customer, which was not true.
Johnson then had a third chance to spot the red flags, as KDF, Inc.'s bank returned the funds due to an invalid beneficiary account number, yet instead of telephoning or otherwise attempting to verbally resolve the issue, Johnson purportedly permitted the imposter to provide a third beneficiary—only to change that beneficiary to a fourth (an individual), who held an account at a third bank.
Upon submitting this version of information into the system, Johnson again purportedly made the false statement concerning her verbally confirming the wire transfer request with her customer when no such confirmation had occurred.
This false statements additionally caused Morgan Stanley to maintain inaccurate books and records, according to FINRA's findings. FINRA also cited Johnson for failing to disclose a 2010 discharged bankruptcy petition filed in Denver, CO, on an industry form that specifically asked about such a filing.
Morgan Stanley, meanwhile, terminated Johnson in 2016 for providing inaccurate information to the firm to process the third party wire transfer request without verbally confirming the request with her client. The disclosure indicates that Morgan Stanley later discovered that the wire transfer was sent by someone fraudulently impersonating the client.
If you have invested with former Morgan Stanley senior registered sales associate Nancy L Johnson of the firm's Greenwood, Village, Colorado branch, or with any broker or financial adviser whose failure to verbally confirm a wire transfer or other transaction request has proven harmful to your investments or interests due to fraud or unauthorized, unsuitable, or excessive trading/transactions, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.