Joseph D. Olheiser, former General Securities Representative of Morgan Stanley Smith Barney LLC, has agreed to pay a fine as a part of a settlement with the United States Financial Industry Regulatory Authority (FINRA).
Olheiser entered the securities industry in May 2002 and first registered with FINRA in December 2010 through another member firm. In April 2016, Olheiser joined Morgan Stanley Smith Barney LLC as a General Securities Representative (GSR). In February 2019, he voluntarily terminated his association with Morgan Stanley and joined Raymond James Financial Services, Inc. as a GSR. Raymond James discharged Olheiser in May 2019.
In February 2019, in anticipation of joining Raymond James, Olheiser improperly removed from Morgan Stanley his customers’ nonpublic personal information, which he had received from Morgan Stanley as part of his employment as a registered representative. Olheiser faxed to Raymond James the client profile information for 20 Morgan Stanley customers, without their knowledge or consent, in order to open accounts at Raymond James.
The Morgan Stanley client profiles included detailed information, such as account numbers, account objectives, investment time horizons, risk tolerances, and account balances. Olheiser improperly possessed this information after leaving Morgan Stanley.
At all relevant times, Morgan Stanley’s policies and procedures required representatives like Olheiser to use customers’ nonpublic information only in their capacity as a representative and prohibited the use or disclosure of nonpublic confidential customer information for the representative’s own personal benefit or for the benefit of a new or prospective employer.
Let’s note that Regulation S-P generally prohibits financial institutions from disclosing “nonpublic personal information” about a customer unless the customer receives proper notice and an opportunity to opt out of disclosure.
A registered individual who improperly discloses nonpublic personal information about a customer, thereby causing his FINRA member firm to violate Regulation S-P, violates FINRA Rule 2010, which requires registered persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
Therefore, Olheiser violated FINRA Rule 2010 by causing Morgan Stanley to violate Regulation S-P.
The sanctions envisaged in the settlement include:
- A suspension from association with any FINRA member firm in all capacities for 10 business days; and
- A fine of $5,000.