If only CFD Investments had known that its Investment Company Products/Variable Contracts Representative was serving as a Trustee for 2 customer trust accounts, it might have devised safeguards or controls that could have prevented this broker from stealing nearly all the assets in these customer account. But they didn't, which gave the broker and his wife -  who were appointed co-trustees - the opportunity to take unfair advantage of innocent and unsuspecting customers and clients. Unfortunately too late, FINRA found out and entered into a settlement with the broker, which included his being barred from the industry.  Prior to that, John Haeffel and his wife ran through the accounts, unbeknownst to all.  Obviously, all the funds that he disbursed to himself were wrongful and without authorization.

[C-I Take Away: Sound all-too familiar?  Perhaps the firm could have implemented a procedure for communicating with customers -trusts and other fiduciary entities - advising them to provide the firm (not the broker) with names of trustees and other authorized persons, along with warnings of what can happen if the firm is blind to undisclosed fiduciary relationships.]

FINRA Findings of Alleged Violations. From 2000 to mid-2009, Haeffele wrongfully and without authorization converted from two trusts over $100,000 in funds for his own use and benefit, in violation of NASD Conduct Rules 2110 and 2330(a), and FINRA Conduct Rule 2010.  To conceal his actions, Haeffele, between 2001 and mid-2009, provided to the grantor of one of the trusts false account statements which grossly overstated the value of the trust's assets. Furthermore, from 1998 to mid-2009, Haeffele never disclosed in writing to CFD that he was serving as a trustee and receiving compensation for his activities.  Then, Haeffele was appointed as a co-trustee for another trust, which owned life insurance policies for which Haeffele was the agent of record on, and he wrongfully and without authorization, disbursed funds to himself from the life insurance policies held in the name of the trust.  Throughout, Haeffele falsely responded to firm compliance questionnaires, by not disclosing that he served as a trustee for 2 trusts and that he received compensation. Conversion of Trust #1's Assets. In or about February 1998, Haeffele and his wife were appointed as co-trustees a Trust that, like the first, was established to provide living expenses and medical care for the donor's disabled child.  On or about 6/1/98.  Haeffele, the broker of record, opened a brokerage account at CFD for the PC Trust On behalf of the Trust, and he subsequently invested in approximately 9 mutual funds sold through through the firm.  He also opened checking accounts for the Trust that were unaffiliated with the broker-dealer.  Starting in 2000, and continuing through August 2009, Haeffele, wrongfully and without authorization, disbursed funds to himself from the Trust mutual fund accounts and the Trust checking accounts.  He used these funds for his own benefit. Conversion of Trust #2's Assets. In or about February 1998, Haeffele and his wife also were appointed as co-trustees for the a Trust established to provide living expenses and medical care for the donor's disabled child.  The Trust owned 3 life insurance policies for which Haeffele was the agent of record on each policy.  From 2003 through August 2009, he wrongfully and without authorization, disbursed funds to himself from the 3 life insurance policies held in the name of the Trust, using the proceeds for his own benefit. By these actions, Haeffele converting the trust assets.  As Trustee, he received account statements for the first trust from mutual fund issuers, but only provided the trust’s creators false and misleading account statements and related correspondence that he created on his computer for the trust.  Not surprisingly, FINRA found that the fabricated account statements and correspondence grossly overstated the value of the trust’s assets. For further details, go to:  [AWC #2009019590501, as reported in FINRA Disciplinary Actions for Sept 2011].