On January 22, 2017, a FINRA disciplinary action, found former RBC Wealth Management-US (RBC) broker Thomas Lee Johnson (CRD#: 1215434) guilty of theft. After 34 years in the industry, he is now barred from working as a broker. The FINRA complaint found Johnson stole more than $1 Million from RBC.
The theft took place following a foreign currency conversion system error. RBC had liquidated Johnson’s shares and warrants in Doosan Heavy Industries & Construction Co. The shares ended up priced in South Korean won instead of US dollars. This turned out to be a million dollar mistake. In Korean won, the total came to $1,059,544.98. The actual value of the liquidated assets Johnson should have received was closer to $1,000 US dollars, $951.01 to be exact. Because the transaction was automatic, Johnson claims he and his assistants believed the warrants were correctly priced. They did not realize the valuation they saw was actually in Korean won.
Although the broker made it a practice to track his RBC account daily, Johnson claims he didn’t know the $1 Million value was a mistake. FINRA believes he was well aware of the actual value of the holdings and should never have transferred the money. In fact, FINRA found the broker never even tried to confirm the price.
Rather than notify RBC of a discrepancy, Johnson chose instead to wire the money from the brokerage account to his personal non-RBC associated checking account. A few days later, RBC found the error and rebilled the transaction at the correct selling price. When Johnson saw the reversed transaction, he tried to cover his tracks. He withdrew $1,060,000 from his personal account and deposited it back into his RBC account.
According to the disciplinary action, investigators found Johnson intended to split the proceeds with his siblings at a later date. Also, during the investigation, the broker falsely remarked that two of his sales assistants had researched the value of the transaction. The enforcement panel found Johnson guilty of converting the money and charged him with FINRA rules violations. The action holds him responsible for monetary sanctions and the cost of the proceedings.
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