by Howard Haykin

The broker repeatedly denied having any knowledge of the account and speculated that the customer may have opened the account without the broker’s knowledge. To the contrary, FINRA found that the broker had, in fact, opened the joint account with his elderly customer and, in the ensuing months, accessed the account online numerous times.

FINRA charged the broker with violating securities laws: (i) he opened an undisclosed brokerage account away from his employer; and, (ii) he provided false testimony during an investigation. The broker was terminated by Centaurus and banned from the industry.

INVESTOR TAKE AWAYS.    Without the anonymous tip and FINRA’s intervention, the elderly investor could have lost all of his cash and securities in the joint brokerage account – because the broker had full access to the account. Fortunately, no apparent financial harm came to the investor. Most investors in such situations are not so lucky.

As a 'word to the wise', investors should never open a brokerage account in joint name with a broker, unless he or she is a trusted immediate family member – and only if the account is opened at the firm with which the broker is associated. Transparency is critical.

I also join attorney Bill Singer in encouraging senior investors and their care givers, families and friends to familiarize themselves with the FINRA Securities Helpline for Seniors. It could one day be a ‘lifeline’ to financial security.

[For further information on this case and the FINRA Helpline, click on BrokeAndBroker.]