Patrick Joseph Donohue (CRD #4439545, Registered Representative, Sausalito, California) was barred from FINRA.
/
DISCIPLINARY ACTION
Patrick Joseph Donohue (CRD #4439545, Registered Representative, Sausalito, California)
submitted a Letter of Acceptance, Waiver and Consent in which he was barred from
association with any FINRA member in any capacity. Without admitting or denying the
findings, Donohue consented to the described sanction and to the entry of findings that
he engaged in an undisclosed outside business activity by providing tax preparation
assistance and various other services to customer accounts and received approximately
$57,897 in payments. The findings stated that Donohue did not provide his member firm
with written notice of this activity and did not obtain the firm’s approval to engage in the
activity. Donohue‘s firm’s WSPs and procedures prohibited firm employees from engaging
in outside business activities without submitting a written request and obtaining firm
approval prior to engaging in those activities. The findings also stated that Donohue
assisted a trust with preparing a financial audit for which he anticipated receiving $4,200.
Donohue drafted and signed a check for $4,200 from the trust account payable to himself,
even though he was neither an authorized signer nor a fiduciary for the account and was
not authorized to sign a check from the account. A recently deceased individual was the
only authorized signer for the trust account. Donohue was not appointed as successor
trustee and did not obtain check-writing authority until later. Donohue drafted and signed
an additional $4,200 check from the trust account payable to himself to which he was not
entitled because he had previously obtained the $4,200 by the earlier check. The findings also included that Donohue completed a firm questionnaire and falsely indicated that he
did not engage in any outside business activities. Donohue stated that he was not named
as a beneficiary on a non-family member account although he was aware an individual
had designated him as a beneficiary of his estate that maintained a trust account with the
firm. The firm’s written policies and procedures required employees to immediately notify
their supervising managers if they learned they had become the beneficiary of a customer’s
estate, but Donohue did not follow these procedures.
FINRA found that on a firm questionnaire, Donohue denied he was compensated outside of
firm payroll even though he had knowingly accepted compensation from a firm registered
representative for whom he had worked as a sales assistant. The firm required that all
financial advisers pay bonuses to sales assistants through the firm’s online payroll system.
The representative and Donohue deliberately sought to conceal these payments from the
firm by routing the payments through a checking account held by the representative’s
wife away from the firm. Donohue received a total of $18,001 through the wife’s checking
account. FINRA also found that in annual compliance questionnaires, Donohue falsely
denied he engaged in any outside business; served as a beneficiary on a non-family
member account; acted in a fiduciary capacity on any accounts; accepted checks and/or
securities from clients within the past year even though during one year he did; received
compensation from financial advisers outside of firm payroll systems; and denied receiving
any gifts worth over $100 from clients within the past 12 months, even though he accepted
cash and stock gifts from an individual contrary to firm policy. Donohue worked with
the individual to circumvent this policy by arranging for the transfer of shares of stock to
Donohue via a third party. In other questionnaires, Donohue indicated he had not provided
any false information in the questionnaires, which was inaccurate.
In addition, FINRA determined that a fraudster impersonated a firm customer and hacked into the customer’s email account. Donohue received emails from the email address on file for the customer, who was a signatory on a firm account for an entity. The emails contained instructions for wire transfers to be made from the entity’s account to third-party destinations. Donohue completed verbal wire processing forms in which he falsely indicated he spoke to the customer regarding the wire requests contrary to firm policy, which required employees to have direct verbal communication with customers prior to effecting wire transfers. After Donohue submitted the forms to the firm, wire transfers totaling $63,000 were effected. Subsequently, it was discovered that the customer had not authorized the transfers and the firm reimbursed the entity for its losses. Moreover, FINRA found that by falsifying firm documents, Donohue caused the firm to maintain inaccurate books and records. (FINRA Case #2012033272801)