Stephen Fry Barred By FINRA After $1.2M Funds Conversion

Stephen Fry (Stephen Douglas Fry CRD: 2928258) is a former registered broker and investment advisor whose last known employer was Woodbury Financial Services, Inc. (CRD#:421) of Germantown, TN. His previous employer was H.D. Vest Investment Services (CRD#:13686) of Cordoba, TN. He has been in the industry since 1998.

As a financial advisor with Woodbury Financial Services, Fry was able to operate as Fry Financial Services in Germantown, Tennessee. This business model is frequently used by independent contractors or others affiliated with small or regional brokerage firms. However, Woodbury remains responsible for the acts of their financial advisors or stockbrokers and are required to maintain a supervisory system and to comply with FINRA rules and regulations.

After Fry refused to comply with FINRA’s request from information from Fry on two occasions (September 26, 2019 and October 21, 2019), the agency suspended him effective December 30, 2019. Fry failed to request termination of his suspension within 3 months of his suspension. FINRA then barred him indefinitely from any association with a FINRA broker-dealer.

On November 11, 2019, a customer filed a dispute against Fry alleging “conversion of funds belonging to family relative,” requesting damages of $1,261,000.00. The case was reported as settled and Stephen Fry’s CRD has some unique FINRA language. Generally, the settlement amount must be accurately reported on the financial advisor’s CRD or securities license. However, in this case, the report states “Settlement amount is confidential at the direction of the customer, and the figure $999,999 was used to maintain that customer demanded confidentiality. The actual settlement is less than $999,999.”

This settlement language is particularly unique because FINRA requires all settlements above a certain amount to be accurately reported. Specifically, FINRA Rule 4530(a)(1)(G) requires that a member firm submit a report if, among other things, it or an associated person is a defendant in any securities-related private civil litigation or arbitration that is disposed of by judgment, award or settlement for the following dollar thresholds: (1) above $15,000 for an associated person; or (2) above $25,000 for a firm. It will be interesting to see if FINRA requires the actual amount to be accurately reported on the stockbroker’s CRD report.

A stockbroker is generally prohibited from borrowing money from customers. Financial advisors are in a unique position to know of a customer’s net worth and financial situation. Most brokerage firms have rules and practices which prohibit borrowing money from customers and, at a minimum, ask a financial advisor to disclose all loans or borrowing from a customer as the first line of supervision.  However, if your financial advisor borrows money or otherwise takes money from your account, you should seek an attorney to understand your rights to collect that money from the broker and/or brokerage firm.

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