Former Arvest Asset Management Exec Fined for Dealings with Smiley

Faithful readers may remember our reporting several months ago (“Whispers,” Dec. 15) on Joseph Edward Bryan “Jeb” Mills, a longtime executive for Arvest Asset Management in Northwest Arkansas who was discharged from that position by a federal regulator on Oct. 10, three days after Mills learned he was being investigated by the Financial Industry Regulatory Authority Inc.
(FINRA).

AAM, an SEC-registered investment adviser and a FINRA member, is a subsidiary of Arvest Bank of Fayetteville.

FINRA alleged that Mills, who had no prior relevant disciplinary history, violated FINRA Rule 2010 through improper execution of documents in a case involving former Arvest-Benton County president and CEO Dennis Smiley, who abruptly resigned in March 2014 and, in the aftermath of his departure, later faced claims from as many as 20 banks saying he left them holding toxic debt.

The investigation into Mills’ role in the fraud case is over, and his punishment is almost over.

On April 30, Mills, although not a complicit party to Smiley’s scheme, was fined $15,000 and given a three-month suspension from association with any FINRA member firm in any capacity. The suspension period ends Aug. 3.

Mills resolved the matter by way of a Letter of Acceptance, Waiver and Consent (AWC). An AWC is essentially a settlement agreement with Finra in which the representative (1) consents to (but does not admit or deny) certain “findings” as to the facts that underlie the violation, and (2) accepts certain sanctions. 

The FINRA investigation revealed at least three occasions between August 2013 and February 2014 that Mills signed paperwork provided by Smiley without first reviewing the documents.

The documents, according to FINRA, misrepresented Mills’ position, stating that he was an executive vice president of Arvest Bank.

The documents also misrepresented that Smiley could pledge certain stock as collateral. Arvest Bank employees were allowed to purchase restricted bank stock, but were prohibited from pledging the stock as collateral.

Mills was aware the bank stock couldn’t be pledged as collateral, according to FINRA, and he also knew he wasn’t an EVP and didn’t have authority to sign documents on behalf of Arvest Bank.

After obtaining Mills’ signature, Smiley used the signed documents to represent they had been signed by a bank officer in order to improperly secure loans. Mills’ failure to review the documents he signed more thoroughly violated FINRA Rule 2010, which says a “member in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”

Mills remains employed by Arvest Bank — and has been since April — in a business development capacity, because the bank is not a FINRA member, unlike Arvest Asset Management.