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- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
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- SEC's Opening Remarks to the Elder Justice Coordinating Council
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- Former JPMorgan Broker Files racial discrimination suit against company
- $3.3Mn Winning Bid for Lunch with Warren Buffett
- Julie Erhardt is SEC's New Acting Chief Risk Officer
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Elder Financial Abuse (Part 3): FINRA Case Studies
by Howard Haykin
7. Joseph Gunnar & Co. Broker fined $20K, suspended 3 months, required to pay $3K in restitution, and required to complete 10 hours of CE training. Made unsuitable recommendations to an elderly customer living on a fixed income. [January 2018 - FINRA AWC #2013039507101]
► Customer’s account represented substantially all of her liquid assets.
► Nevertheless, broker repeatedly recommended high-risk, speculative securities that resulted in undue concentration.
► Broker further engaged in short-term, in-and-out trading of the speculative investments, creating losses in excess of $150,000.
► Broker also engaged in unauthorized trading by placing trades in the IRA’s of a customer whom he knew was deceased.
8. Legend Securities Broker fined $80K, barred, ordered to pay $155K in restitution and >$10K in disgorgement. Churned and excessively traded accounts of his customer - a blind, elderly widow - and made unsuitable recommendations. [January 2018 - FINRA AWC #2015048048801]
► Broker recommended an unsuitable variable annuity (“V/A”).
► Broker “plundered” customer’s accounts by engaging “in such an active trading strategy that, when the high commissions he charged were taken into account, it was impossible for [the customer] to make money.”
► Frequently bought and sold a security within a week or two, and charged exorbitant commissions even though the blind widow’s financial circumstances required that Werner invest her assets with a minimum amount of risk.
► Broker engaged in over 700 trades from October 2012 to December 2015, generating approximately $210,000 in commissions while the customer lost more than $175,000.
► Legend Securities also named in an amended disciplinary complaint for failing to reasonably supervise Broker.
9. Legend Securities Broker fined $10K, suspended 10 months. Engaged in unsuitable excessive trading in the accounts of 2 customers, one of whom was a retired senior citizen. [February 2018 - FINRA AWC #2015047602801]
► Broker exercised control over these accounts because customers had limited investment experience and both of them relied on him to direct investment decisions in their accounts.
► Active trading in the accounts generated commissions or MU’s or MD’s, along with significant losses.
10. Foresters Financial Services Broker fined $10K, suspended 3 months. Solicited and accepted $5,000 personal loan from elderly customer whose account he serviced, without notifying or seeking prior approval from his member firm. [February 2018 - FINRA AWC #2017054665401]
► Broker did not make any repayment of the loan, though firm ended up repaying customer.
► During the course of firm’s internal investigation, broker provided misleading information to the firm’s staff about why the customer liquidated
► $5,000 from a mutual fund position and withdrew those funds from his firm account.
11. Lincoln Financial Advisors Broker was barred from the industry. Converted an elderly customer’s funds. [April 2018 - FINRA AWC #2018057246701]
► Elderly customer agreed to invest $20,000 in purported real estate investment and gave broker a check for $20,000 made payable to the name of a business owned by him.
► Broker endorsed the check, deposited it into a bank account he controlled and used the funds for his own personal use.
► Broker’s firm made customer whole.
12. Wells Fargo Clearing Services Broker was barred from the industry. Over 3-year period, broker converted over $180,000 for his personal use from an elderly customer by accepting the money with no intent or ability to repay the customer. [April 2018 - FINRA AWC #2017056152801]
These cases were reported in FINRA Disciplinary Actions for January, February and April of 2018.
For details on any case, go to ... FINRA Disciplinary Actions Online, and refer to the Respective AWC Number.