Broker “Bites the Dust” with FINRA Bar. RBC Broker Gets Caught Stealing $1.1 Million Windfall.

Cowboy-bites

An ex RBC Broker has been accused of stealing $1.1 million that RBC Wealth Management-U.S. accidentally deposited into his brokerage account. The broker, Thomas Lee Johnson has been barred by the Financial Institutions Regulatory Authority (“FINRA”)  from working at a U.S. broker-dealer.

The FINRA Hearing panel determined on August 22, 2019 that the broker, Thomas Lee Johnson “acted knowingly” when he withdrew funds that RBC deposited into his account as a result of a foreign currency conversion error.

Instead of reporting the discrepancy, Johnson wired the money from his own brokerage account to a personal account outside of RBC. RBC picked up the mistake and restated the transaction at the correct price. When Johnson found out about the corrected transaction, he covered his tracks and withdrew $1,060,000 from his separate personal account re deposited the funds into his RBC account.

The FINRA disciplinary Panel determined that Johnson intended to split the proceeds with his siblings later on. The FINRA Panel concluded that Johnson converted the money.

The $2.2 million deposited into Jonson ‘s account was a translation error RBC in 2017 when it liquidated his warrants in South Korea’s Doosan Heavy Industries & Construction Co. after change of transfer agents. RBC stated the liquidated value of $1,059,544.98 rather than the true value of $951.01.

Johnson later returned the money to his brokerage account after reversal of the RBC the error a week later. Johnson’s position was that he had misinterpreted the warrant values by stating them in U.S. dollars rather than of Korean Won. Chief Hearing Officer Michael H. Dixon wrote Johnson, stated that Johnson “knew all along the money was not his to keep,”…“It was too good to be true.”

Johnson was previously affiliated with Dean Witter Reynolds, Lehman Brothers and Smith Barney before joining RBC in 2009.
Johnson was fired by Royal Bank of Canada’s U.S. wealth unit in December 2017.  Johnson now operates a registered investment advisory firm, “Royal Capital Wealth Management in Carmel, Indiana.” Reportedly, Johnson manages $108 million in assets according to the most recent latest ADV filing with the Securities and Exchange Commission.

The FINRA decision did not prevent Johnson from working as an investment adviser.

The FINRA Panel concluded that Johnson should reported the error to responsible persons.

The FINRA Hearing Panel stated:

“Johnson did not contact anyone…because he hoped that RBC would never catch its error and he would reap an extraordinary 1,000-fold windfall at his employer’s expense,”…“It would require the suspension of disbelief and an utter display of naiveté for the Panel to find otherwise.”

Anthony M. Abraham, Esq., PC is experienced in broker fraud, churning and unauthorized trading claims. If you suspect that your account has been churned, please call us Toll Free at 1-877-430-4877 for a Free Consultation or email us at Anthony@Abrahamattorneys.com.