BROWSE BY TOPIC
- Compliance Concepts
- Investor Protection
- Investments - Unsuitable
- Investments - Strategies
- Wall Street News
- Bad Brokers
- Investments - Private
- Rules & Regulations
- Bad Advisors
- Boiler Rooms
- Terminations/Cost Cutting
- General News
- Donald Trump & Co.
- Big Banks
- Regulatory Sanctions
Stories of Interest
- Sarah ten Siethoff is New Associate Director of SEC Investment Management Rulemaking Office
- Catherine Keating Appointed CEO of BNY Mellon Wealth Management
- Credit Suisse to Pay $47Mn to Resolve DOJ Asia Probe
- SEC Chair Clayton Goes 'Hat in Hand' Before Congress on 2019 Budget Request
- SEC's Opening Remarks to the Elder Justice Coordinating Council
- Massachusetts Jury Convicts CA Attorney of Securities Fraud
- Deutsche Bank Says 3 Senior Investment Bankers to Leave Firm
- World’s Biggest Hedge Fund Reportedly ‘Bearish On Financial Assets’
- SEC Fines Constant Contact, Popular Email Marketer, for Overstating Subscriber Numbers
- SocGen Agrees to Pay $1.3 Billion to End Libya, Libor Probes
- Cryptocurrency Exchange Bitfinex Briefly Halts Trading After Cyber Attack
- SEC Names Valerie Szczepanik Senior Advisor for Digital Assets and Innovation
- SEC Modernizes Delivery of Fund Reports, Seeks Public Feedback on Improving Fund Disclosure
- NYSE Says SEC Plan to Limit Exchange Rebates Would Hurt Investors
- Deutsche Bank faces another challenge with Fed stress test
- 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
- Chyhe Becker is SEC's New Acting Chief Economist, Acting Director of Economic and Risk Analysis Division
- Getting a Handle on Virtual Currencies - FINRA
We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.
Stay Informed with the latest fanancialish news.
NEWSLETTERS & ALERTS
Investments - Private
No Contest - Elderly Customers Lose Everything in Broker's Investment Scam
by Howard Haykin
John M. began on ‘Wall Street’ in 1977 and, along the way, he worked for reputable brokerage firms like Morgan Stanley, Dean Witter and E.F. Hutton. In 2006, John M. joined UBS Financial Services, and operated out of a branch office in Michigan.
John M. launched his investment scam in 2008 by telling customers they could invest in a fund that would allow them to: (i) diversify their portfolios; (ii) receive annual investment returns as high as 20%; and, (iii) experience investment growth potential that was better than the growth they received in their brokerage accounts. To pay for their investments, customers sold off their retirement accounts or borrowed against them and made checks payable to John M. All monies were deposited into the broker's personal accounts.
However, John M. did not invest the customers' funds, and instead stole the funds for his personal use. To conceal the scheme, John M. falsely told customers that the funds in which they "invested" were performing well and that they should send more money. In addition, he told customers not to tell others about the purported fund investment, provided some of his customers with fake account statements reflecting fictitious returns, and paid over $400,000 in Ponzi-like payments to certain of the customers to keep the scheme alive.
In early 2018, the scheme unraveled when a concerned client contacted federal authorities after receiving a purported account statement that contained errors and misspellings. John M. was fired by UBS and banned from the industry, and in February 2019, he pled guilty to embezzling more than $3.7 million and was sentenced to 9 years in prison.
INVESTOR TAKE AWAYS. John M. utilized his affable nature and significant industry experience to bamboozle his customers. The scheme was able to continue for 10 years because John M. was never challenged by his customers - they either were too afraid to challenge his representations, or they lacked the financial wherewithal to see through his apparent lies, representations and inconsistencies.
Once again, elderly and unsophisticated investors are encouraged to seek out assistance in overseeing their financial assets - a trusted friend, family member or financial watchdog. Until such safeguards are in place, investors risk significant losses at the hands of dishonest brokers.