by Howard Haykin

In early 2010, a broker with Hilltop Securities created a false account statement for a customer, who said he needed a ‘working capital’ bank loan for his company. The broker accommodated the request by changing the name, address and account number on someone else's customer statement, which showed the account holding more than $3 million in securities. The broker then gave the false account statement to the bank's loan officer and, based in part on that false statement, the bank issued a $1.872 million loan.

After that, the broker continued to create a false account statement for every month - from April 2010 until October 2016 and again from September 2018 until January 2019 - because the bank required such statements. For all his 'services', the broker received $50,000 from his customer.

Based in part on the false account statements, the bank increased its business with the customer’s company to the point where the the loans exceeded $3.2 million. In January 2019, the customer’s company defaulted on its bank loans, leaving the bank with a total loss.

In September 2019, the Financial Industry Regulatory Authority (FINRA) closed the loop by barring the broker from the industry - though the broker apparently was able to retain his $50,000 in fees.

[For further details, click on FINRA Case #2019061689501.]