An already terminated Wells Fargo dually registered advisor was suspended by the Financial Industry Regulatory Authority for allegedly trading in a deceased client’s account without authorization.
From January 2019 to April 2019, while registered with Finra through Wells Fargo, Michael McDermott of Mobile, Ala., traded without authorization in the account of a firm customer, both before and after the customer's death, according to a Finra letter of acceptance, waiver and consent that McDermott signed.
McDermott also falsified notes of contact with the customer to predate his death, which in turn caused Wells Fargo to maintain inaccurate books and records, Finra said.
“In January 2019, McDermott placed a trade in the account of one of his customers without first obtaining the customer's authorization,” Finra said. The account was fee-based, so McDermott earned no commissions.
In March 2019, the customer passed away. Unaware that the customer had died, McDermott placed multiple stop loss orders in the customer's account in April 2019, three of which were executed and several of which were cancelled, the regulator said.
McDermott also falsified communications with Wells Fargo about conversations with the customer, Finra said. In April, 2019, McDermott wrote a note in the firm’s electronic customer note system “falsely indicating” that he had spoken with the customer in connection with the stop loss orders.
“This was not possible as the customer had died in March,” Finra said.
On May 15, 2019, after learning of the customer's death, McDermott edited his original note “to inaccurately state that McDermott's conversation had occurred in January 2019,” the regulator added.
Without admitting or denying guilt, McDermott consented to a three-month suspension. He is not currently registered with a securities firm, according to his BrokerCheck record.
He spent 23 years in the industry, joining Wells Fargo in 2014. He was discharged by the firm in March 2020 “after internal review revealed that advisor entered stop loss orders in account of deceased customer, per prior discussion, not knowing customer was deceased,” according to BrokerCheck.
McDermott began his brokerage career with Morgan Stanley in 1996.