NASD fines AmSouth in 6-year-old fraud case
Source: Birmingham Business Journal - August 11, 2006 by Tiffany RayStaff
Securities industry regulators have fined the investment arm of AmSouth Bancorporation $100,000, settling a case stemming
from the sale of variable annuities by a Mississippi broker that dates back to 2000.
The NASD (formerly known as the National Association of Securities Dealers) noted the fine in its July report of disciplinary
actions, alleging that AmSouth "failed to establish and maintain a system reasonably designed to supervise its registered
representatives situated in remote branch locations in connection with the sale of variable annuities and mutual funds."
According to NASD information, in 2000 and 2001, James B. Moorehead, then a Starkville, Miss.-based broker with AmSouth
Investment Services Inc., allegedly forged customer signatures on new account and variable annuity forms and provided
inaccurate information on documents regarding customers' finances "in order to make his variable annuity recommendations
appear suitable."
NASD documents cite 125 cases of alleged forgery on forms authorizing him to purchase variable annuities for AmSouth customers
and 18 instances in which he allegedly falsified financial information.
In November 2004, Moorehead was barred by the NASD from association with its members.
The following month, a sales assistant in the Starkville office, Angela C. Wynne, was suspended for six months by the NASD
and fined $5,000.
The NASD regulates about 5,100 investment firms nationwide.
"The conduct of the broker in this case was reprehensible, and clearly merits the harshest penalty NASD can impose,"
Barry Goldsmith, NASD's then-executive vice president and head of enforcement, said in a 2004 statement.
AmSouth was censured and fined by the NASD for alleged "shortcomings of the supervisory system" that failed to immediately
detect the broker's violations.
AmSouth discovered the broker's alleged actions in April 2001, says company spokesman Rick Swagler.
The broker was fired and changes were instituted to better detect and prevent any future problems, he says.
"We reviewed our processes and made some investments in technology and training to make sure we had the right controls
in place."
The issue was settled with state security officials in 2004, Swagler reports.
In their dealings with regulators, AmSouth and Moorehead neither admitted nor denied agencies' accusations.
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