Joseph Henry Murphy III, of Madison, Wisconsin, a stockbroker formerly registered with RBC Capital Markets, LLC, has been fined $5,000.00 and suspended from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he traded in customer accounts on a discretionary basis in violation of his firm’s policies. Letter of Acceptance, Waiver and Consent, No. 2016049008801  (Feb. 16, 2017).

According to the AWC, on February 11, 2015, eighty transactions were effected by Murphy in twenty-seven customer accounts on a discretionary basis, even though the customer accounts were not set up for non-discretionary trading. Despite Murphy reportedly speaking with customers prior to days in which trades were executed, customers did not provide authorization to Murphy to place trades on the exact days in which the transactions had been executed.

Subsequently, on October 27, 2015, thirty-two transactions had been effected by Murphy in twenty customer accounts. Here again, the AWC stated that Murphy failed to retrieve the requisite authorization from customers on the days he placed the trades. The AWC also revealed that on December 22, 2015, eleven transactions involving mutual funds were effected by Murphy after speaking with a customer by phone; however, the customer never specified the monetary amounts nor the mutual funds which would be involved in the transactions.

Murphy evidently failed to get approval from forty-eight of the firm’s customers prior to exercising discretion in their accounts. Further, RBC Capital Markets never deemed the accounts which Murphy traded in to be approved for purposes of discretionary trading. Consequently, Murphy was found by FINRA to have violated the firm’s procedures and policies by exercising discretion in customer accounts, which was conduct violative of FINRA Rules 2010 and NASD Rule 2510(b). FINRA Public Disclosure reveals that Murphy was terminated from RBC Capital Markets LLC on January 25, 2016, based upon the foregoing circumstances.
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