UBS Financial Broker Fined and Suspended by FINRA for 'Shadowing' Trades of Third Party

Soreide Law Group, a Securities Arbitration Law Firm, (888) 760-6552, obtained the following information on FINRA’s website under “Disciplinary and Other FINRA Actions, June, 2013.”

Michael Charles Jennings (CRD #702719, Registered Representative, Wellesley, Massachusetts)

was fined $20,000 and suspended from association with any FINRA member in any capacity for 10 business days. The sanctions were based on findings that Jennings shadowed trades of third-party managers. The third-party managers had contractual agreements with Jennings’ member firm to provide services to its customers. Jennings replicated the confidential strategies and trading of these money managers in customer accounts he managed on a discretionary basis. By shadowing investment managers’ trades without the third-party managers’ knowledge or consent, Jennings was able to misappropriate the third-party managers’ trading strategies without incurring the fees that otherwise would have been due the third-party managers if Jennings had left the accounts with the third-party managers.

The third-party managers reasonably expected that Jennings would not exploit his access to their trading strategies. Jennings devised the shadowing scheme because a customer had threatened to move considerable business to another broker-dealer unless Jennings lowered the fees on the accounts. Jennings felt entitled to the fees and was unwilling to cut the fees he and the other members of his team earned. Instead, to keep the customer’s accounts, Jennings decided to cut the fees being earned by third-party managers without their knowledge or consent, thereby misappropriating their intangible property rights. As a very experienced broker with many years’ experience working with third-party managers, Jennings knew that the managers considered their investment strategies to constitute proprietary, confidential business information.
The suspension was in effect from May 6, 2013, through May 17, 2013.
(FINRA Case #2008013864401)

According to FINRA's BrokerCheck, Michael Jennings is currently employed by and registered with the following FINRA Firm(s):

UBS FINANCIAL SERVICES INC.
LINCOLN HARBOR
1000 & 1200 LINCOLN HARBOR BLVD
WEEHAWKEN, NJ 07086
CRD# 8174
Registered with this firm since: 5/15/2008

BrokerCheck states that Michael Jennings was previously registered with FINRA at the following brokerage firms:

DEUTSCHE BANK SECURITIES INC.
CRD# 2525
BOSTON, MA
01/2001 - 06/2008

DB ALEX. BROWN LLC
CRD# 17790
BALTIMORE, MD
09/1998 - 01/2001

TUCKER ANTHONY INCORPORATED
CRD# 837
BOSTON, MA
12/1979 - 09/1998

This ends the information obtained on FINRA’s website.

If you have sustained investment losses due to your stock broker/financial advisor’s recommendations, call Soreide Law Group for a free consultation with an attorney on how to potentially recover your losses: 888-760-6552.