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Investor Protection

It's Christmas: What Not to Give Your Broker

December 13, 2019

by Howard Haykin



It’s the holiday season and the spirit of giving is inspiring. But before you select a gift for a favorite broker, keep in mind some gift-giving restrictions on Wall Street. For starters, most brokerage firms prohibit their brokers and associated persons from accepting gifts that are in excess of $100 in value. Second, many firms prohibit any gifts in the form of cash or cash equivalents.
Failure to abide by industry rules and firm policies can give a broker the chills!  Brrrr.



Take the case of a broker who worked for LPL Financial and then for Voya Financial Advisors. Over a 7-year period, this broker received more than $70,000 in monetary gifts from her elderly customer. [WOW - what form of service did this broker provide to deserve such generosity?]


Apart from the amount - which is a problem - this broker knew she violated both firms’ gift policies by accepting the cash gifts. And As punishment for her actions, FINRA, the securities regulator, suspended the broker for 4 months; no fine was assessed in consideration of the broker’s financial status.



ELDERLY CUSTOMERS BEWARE.    FINRA looks out for elderly customers, who often need protection not only from unscrupulous brokers but from themselves. Large and unusual gifts from elderly customers will raise the following concerns:

- Was the customer fully aware of his/her actions?

- What was the customer’s mentally capabilities when the gift or gifts were made?

- Did the broker purposely take advantage of the customer?


Elderly customers and their caregivers or financial watchdogs are cautioned to respect the industry’s rules – for the protection of both the customer and the broker.



[For further details on this case, click on … FINRA Case #201705447340.]

[For further guidance, click on … 13 Gifts That Could Get You in Big Trouble With FINRA.]