Scott Paul Smith (CRD #4522269, Sunset Beach, California)

An AWC was issued in which Scott Paul Smith (CRD #4522269) was fined $10,000 and suspended from association with any FINRA member in all capacities for 12 months. Without admitting or denying the findings, Smith consented to the sanctions and to the entry of findings that he borrowed a total of $78,000 from an elderly customer without providing prior written notice to or obtaining written approval from his member firm. The findings stated that the customer, who was one of Smith’s retail customers at the firm, was not Smith’s immediate family member nor was she in the business of lending money. Scott Paul Smith used the funds to pay for personal expenses. No payment terms were discussed or memorialized for any of these loans, nor did Smith provide any promissory notes for the loans. After receiving a complaint from the customer’s estate, Smith repaid each of the loans. Further, Smith concealed the loans from the firm by instructing the customer to wire the proceeds for certain of the loans from one of her firm accounts to her personal checking account that she held outside of the firm, and then to write a check payable to a member of Smith’s immediate family. On one occasion Scott Paul Smith instructed the customer to wire money directly from her firm account to Smith’s mother-in-law to evade detection by the firm. Moreover, on compliance attestations, Smith falsely attested that he had not received a loan from any firm client. The findings also stated that Scott Paul Smith settled a customer complaint without his firms’ knowledge or approval. Following the death of the customer, her daughter discovered that the customer had made loans to Smith, and her estate demanded that Smith provide a full accounting of all loans outstanding. In response to that demand, Smith sent an attorney representing the estate a check for $40,000, which the estate accepted. Smith did not notify the firm that the customer’s estate had complained that he had borrowed money from the customer or that that he had paid money to her estate to settle the complaint. In addition, after Scott Paul Smith had left the firm and while he was registered with FINRA through an association with another firm, Smith offered the customer’s estate a second check for $25,000, which the estate accepted. This check was also in response to the estate’s demand for a full accounting of the loans Smith took from the customer. Before making the second payment, Smith did not notify either firms of the complaint by the customer’s estate, nor did he seek or receive authorization from either firm to resolve the complaint. The suspension is in effect from February 6, 2023, through February 5, 2024. (FINRA Case #2020066349702)