By Howard Haykin

Robert Loftus, a general securities representative, agreed to a $5K fine and a 3-month suspension to settle FINRA charges that he engaged in check-kiting by depositing checks (drawn on his personal checking account) into the brokerage account that he held with his member firm on 3 occasions when he knew or should have known that he lacked sufficient funds to cover the checks.

BACKGROUND.  Robert Loftus, who resides in New York, NY, entered the securities industry in 1987. He served as a registered rep with Wells Fargo Advisors from March 2009 until June 2013, when he was U5’d for his check-kiting.. He currently is associated – BUT NOT REGISTERED - with another FINRA member firm.

FINRA FINDINGS.    On 3 occasions - once in November 2012, twice in April 2013 - Robert Loftus deposited worthless personal checks into his Wells Fargo Advisors brokerage account. He knew or should have known that the checking account lacked sufficient funds to cover the checks. Nevertheless, he made the deposits in order to benefit temporarily from the “float” on the checks - i.e., to derive the use and benefit of the funds from the time they were credited to his account until other funds were deposited into the account.

• 1st CHECK KITING.    On 11/29/12, Wells Fargo notified Loftus that 2 checks he had written against his Wells Fargo account - one for $5,105, the other for $700 - had been presented against insufficient funds. To avoid a $20 NSF fee, Loftus that same day deposited into his Wells Fargo account a check drawn on his personal checking account in the amount of $6,000. Wells Fargo immediately approved the 2 checks for payment. On 11/30, the $6,000 personal check bounced back for insufficient. Loftus eventually deposited good funds into his account on or about 12/6.

• 2nd & 3rd CHECK KITING.     Loftus kited checks again on 4/10/13 and 4/15/13. In each case, he avoided the $20 NSF Fee and managed to get checks paid by Wells Fargo by depositing personal checks – even when his personal checking account was short the funds. And in each case, his checks bounced.

FINANCIALISH TAKE-AWAYS.    I was taken aback by the fact that a broker, charged with check fraud, only got a 3-month suspension. After all, the cornerstone of the securities industry is INTEGRITY, and someone who commits check fraud should not be trusted with access to customer assets.

However, upon my review of BrokerCheck FINRA’s ‘leniency’ can perhaps relate to the following factors:

• Loftus has a recent history of being ‘financially challenged’. He disclosed 3 tax liens in 2016, reflecting obligations of nearly $140,000. He also disclosed in 2014 that he owes Citigroup Global Markets $510,000 – probably related to a broker loan that would be forgiven after several years of productive service.
• Shortly after he was U5’d by Wells Fargo, Loftus quickly latched on with Arcadia. However, the firm is not covering his registration – which by now has lapsed. He’s essentially through as a broker.

This case was reported in FINRA Disciplinary Actions for May 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2013037575801.