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Regulatory Sanctions

Broker Appointed by Customer as POA, Health Surrogate, Fiduciary - But Fails to Disclose

July 11, 2017

by Howard Haykin


In this case, a broker/advisor seems to have had a customer’s best interests at heart. But he apparently chose the wrong option and, in doing so, violated firm policies and FINRA rules. He ended up paying a harsh but an appropriate price. 


John Wheeler agreed to pay a $20K fine and serve a 6-month suspension in all capacities to settle FINRA charges that he failed to disclose to his member firm that he received compensation in exchange for serving as a customer’s Power of Attorney (POA) and health surrogate, and for paying her bills on a regular basis over a nearly 10-year period.


BACKGROUND.    Wheeler, a resident of St. Petersburg, FL, entered the securities industry in 1982 and, from 1988 until 2015 was associated with Raymond James Financial Services as a registered rep. During that time, Wheeler operated as an independent contractor with the Firm - dba Wheeler Wealth Management.

  • In 1989, when his office location became a branch office and Office of Supervisory Jurisdiction (OSJ), Wheeler became its branch office manager (BOM).
  • From 2001 through 2006, Wheeler Wealth Management was also registered with the State of Florida and/or the SEC as a registered investment advisor (RIA).
  • In January 2009, Respondent became registered with Raymond James Financial Services Advisors, a non-FINRA RIA firm and an affiliate of Raymond James.
  • On 7/21/15, Wheeler was U5’d for "acting as a health care surrogate" and “durable POA" and taking "check writing authority for a non-family member client's account in violation of Firm policy."
  • Wheeler is not presently associated with a FINRA member firm.


Prior to his termination Wheeler held the following active licenses: Series 6, Series 7, Series 63, Series 22 (Direct Participation Rep) and, Series 24.


FINRA FINDINGS.    In July 2004, Wheeler was appointed by one of his customers as Power of Attorney (POA) and as her Health Surrogate. He remained in those roles until the customer’s death in April 2014. In those capacities, Wheeler assisted the customer in paying her bills and participated in client health care coordination with personnel of her assisted living facility and later, her nursing home. In 2009, the customer further granted to Wheeler check writing authority over her checking account and provided him with the checkbook for that purpose.


Over the 10-year period, between 2004 and 2014, Wheeler prepared invoices to the customer for his services. Based on documentation reviewed by FINRA, it’s known that, from October 2011 through March 2014, Wheeler wrote 56 checks on the customer’s behalf - including 7 checks made payable to himself or Wheeler Wealth Management for $7,300 in payment for the services he provided to her. The other checks were paid for such purposes as the nursing home, various doctors and clinics, and the telephone company.


Throughout that time, Wheeler never disclosed these activities to the Firm as (i) outside business activities (OBA’s), (ii) fiduciary relationships with a customer; or, (iii) customer funds that he controlled (as it concerned the customer’s checking account). All told, Wheeler misrepresented on Raymond James Annual Compliance Interviews for years 2005 and 2007 through 2012 that he was not serving as a POA, personal representative or acting in “any other control position for another individual or entity."


In response to inquiries by a Firm compliance employee in February 2015, Wheeler also falsely asserted that he never had possession or control of the specific customer’s checkbook and never wrote checks to himself or to any entity he controlled from the customer's checkbook.


FINANCIALISH TAKE AWAYS.    Wheeler had at least 2 options when was asked by his customer to serve in various fiduciary roles.


  • He could accept the fiduciary roles, as he did, and not disclose them to Raymond James. This was no doubt prohibited by firm policies and in violation of NASD/FINRA rules.


  • He could refuse to accept the fiduciary roles and done nothing further – but this would have been inappropriate.


  • He could decline the fiduciary roles, explaining to the customer that he was prohibited from serving in those capacities. Then he would refer the customer to a trustworthy third party who could serve her fiduciary needs. Going forward, Wheeler might arrange to informally monitor the services provided by this third party.


Clearly, option #3 was appropriate. And, as much as I was inclined to criticize FINRA’s heavy sanctions, I now must admit that “JUSTICE WAS DONE” by FINRA in this case. While Wheeler may have been well-intentioned, his actions were wrong and he got what he deserved.


This case was reported in FINRA Disciplinary Actions for June 2017.

For details on this case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2015046273701.