[ by Howard Haykin ]

A registered rep with Morgan Stanley Dean Witter, based in Kansas, agreed to settle FINRA charges relating to her role as a fiduciary for a firm customer and to gifts and cash she received in excess of $100. 

Profile of Respondent.  Tammy Larsen of Goddard, KS, began her securities career in 1998.  She worked for 2 broker-dealers before becoming an RR with Morgan Stanley Dean Witter ("MSDW") in September 2003.  On 11/19/10, MSDW U-5'd (terminated) Ms. Larsen's employment because she "comming[led] client assets... in an outside personal bank account."   Ms. Larsen has not returned to the securities industry since leaving MSDW. 

FINRA Findings and Allegations.   Ms. Larsen's troubles related to her relationship with an elderly customer whose accounts she serviced at another broker-dealer prior to joining MSDW. Over time, Ms. Larsen befriended the customer and, in 2001, she was appointed as Trustee of the customer's living trust.  In 2004, when that customer was 80 years old, he moved his securities accounts to at MSDW, and Ms. Larsen was the broker of record for these accounts.

At some point, the customer developed Dementia and sometime after opening the accounts at MSDW, he became mentally incapacitated.  FINRA does not provide sufficient information for us to determine when the customer lost his capacity to make decisions that might have factored into certain events or activities that took place between 2004 and 2010.  The point of this comment is that Ms. Larsen may have committed criminal acts against the customer - but it doesn't appear that FINRA involved itself with this aspect of the case.  It also isn't clear if FINRA may have referred the matter to other divisions of the federal government.

• each year from 2004 through 2010, Ms. Larsen "received" from the customer gifts and cash valued in excess of $100 - and included jewelry, shopping trips, funds for home improvements and two automobiles.

-->  Ms. Larsen made misrepresentations and omissions concerning the receipt of the gifts on numerous Firm annual compliance questionnaires.

• in 2008, the customer "gave" her power of attorney ("POA") over his financial assets, although the POA did not give her authority to use the customer’s assets for her own benefit.

-->  Ms. Larsen made misrepresentations and omissions concerning her fiduciary relationships with the customer on numerous Firm annual compliance questionnaires.

• after the customer moved to an assisted living facility, Larsen wrote a large number of checks to herself, totaling in excess of $200,000 from the customer’s MSDW accounts.
• she deposited the checks into her personal accounts and used the checks not only for the customer’s benefit but for own benefit as well, commingling the customer’s funds with her own.
• toward the end of her employment with MSDW, Ms. Larsen disclosed her fiduciary relationship on a firm compliance questionnaire and the firm required her to submit a written request to act as a fiduciary;  MSDW then denied this request and terminated her employment.
• Ms. Larsen filed a petition for bankruptcy in 2009, but willfully failed to amend her Form U4 to reflect the filing.

FINRA's Charges and Sanctions.   FINRA charged Ms. Larsen with violating NASD Rule 2110 (prior to 12/15/08) and FINRA Rule 2010 (on 12/15/08 and thereafter) with respect to her misconduct concerning the customer.  She also is charged with willfully violating Article V, Section 2(c) of FINRA's By-Laws, IM-1000-I and FINRA Rules 1122 and 2010 with respect to her failure to amend her Form U4 to reflect the filing of the aforementioned bankruptcy petition.

Not surprisingly, Ms. Larsen was banned from the industry.
 

This case was presented in FINRA Disciplinary Actions for January 2013. 

For further details, go to:   [ FINRA AWC #2010025244901 ].