Wells Fargo Stockbroker Barred For Conversion

Jeffrey E. Krupnick, of Sarasota, Florida, a stockbroker formerly employed with Wells Fargo, has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to an Extended Hearing Panel Decision containing findings that Krupnick converted a customer’s funds. Department of Enforcement v. Jeffrey E. Krupnick, Disciplinary Proceeding No. 2014043869901 (Jan. 8, 2018).

According to the Decision, Krupnick converted $143,000.00 worth of customer MK’s funds. Evidently, Krupnick attempted to keep MK in the dark about his activities, where he utilized his access to MK’s investment accounts to misappropriate funds of MK over a period of time. The Decision stated that MK attempted to gain access to his accounts statements; however, Krupnick refused to provide them to MK. MK then reportedly complained to Wells Fargo about Krupnick’s activities; however, Krupnick denied having done anything improper with respect to MK’s funds.

The Decision stated that Krupnick confessed to his Wells Fargo colleague that Krupnick actually converted MK’s funds. Particularly, Krupnick worked with Mitchell Halperin at the firm’s Sarasota office, in which they shared the administration of investor accounts to boost the amount of assets that Krupnick managed. Krupnick was apparently responsible for new business generation, while Halperin handled administration of activities at the Sarasota office as vice president of investments.

The Decision stated that Halperin provided testimony to FINRA regarding his knowledge of a complaint lodged against Krupnick in November of 2014 that involved accusations of Krupnick’s wrongdoing with handling the customer’s trades. Evidently, Krupnick’s registration with Wells Fargo followed the customer’s complaint, at which point Halperin took over Krupnick’s customer accounts. At that time, Krupnick reportedly informed Halperin that he had been accused of stealing MK’s funds, and that Krupnick had actually taken MK’s funds.

Krupnick reportedly denied having committed conversion when accused by FINRA, claiming that he was permitted to withdrawal, transfer and make use of MK’s funds. Krupnick claimed to FINRA that funds had been provided to him by MK on an interest free basis. However, FINRA’s Extended Hearing Panel did not find Krupnick’s statements to be believable. FINRA’s Extended Hearing Panel found that MK’s investment account was treated similarly to Krupnick’s own banking account, where he directed several transfers of MK’s joint account funds to Krupnick’s own accounts, misappropriating thousands of dollars from time to time for Krupnick’s benefit.

FINRA found that Krupnick attempted to conceal his activities by designating accounts statements to be transmitted to himself rather than providing those statements to MK. Krupnick evidently exacerbated his wrongdoing by providing misleading, incomplete and inaccurate statements to FINRA staff in the course of FINRA’s investigation of his activities. Consequently, FINRA’s Extended Hearing Panel concluded that Krupnick’s conduct was violative of FINRA Rules 2010 and 2150(a).

FINRA Public Disclosure reveals that on July 19, 2012, a customer filed an investment related written complaint involving Krupnick’s conduct, alleging that closed-end fund transactions were placed in the customers’ account that were not suitable for the customers in consideration of their ages and objectives for investing. Subsequently, on June 3, 2015, a customer initiated investment related written complaint regarding Krupnick’s activities was resolved for $240,000.00 in damages supported by allegations that Krupnick executed unauthorized transactions in the customer’s investment account.

Following Krupnick’s termination from Wells Fargo Advisors, he was associated with Ameriprise Financial Services, Inc. between August 14, 2015 and October 28, 2017, where he was terminated after having been sanctioned by FINRA for failing to cooperate in an investigation into his misconduct.

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