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Regulatory Sanctions

SEC Bans UBS Broker for Preying on Elderly Customers

December 18, 2018

by Howard Haykin


Any broker is capable of stealing from firm customers – regardless of the broker's age or experience level. Which is why any sized red flag or suspected inconsistency should be challenged, beginning with the question: is there a viable explanation for the exception? If not, then further investigation or drill-down is called for.


Take for example this broker with 40 years’ experience - 20 years with Morgan Stanley Dean Witter, 12 years with UBS. Over a 10 year period, beginning 2008, he defrauded 15 of his retail brokerage customers out of $4 million. [Where did that come from? Better yet, does it matter?]


SEC FINDINGS.    Between 2008 and March 2018, while associated with UBS’s broker-dealer and investment advisor, this broker lied and used high pressure sales tactics to solicit certain of his retail brokerage customers to invest in what he described as a highly-sought-after, alternative, private fund investment through which they could diversify their portfolios, receive annual investment returns as high as 20%, and have investment growth potential that was better than on the securities they held in their brokerage accounts. Most of the injured customers were elderly and retired and invested through their retirement accounts.


Yet, the rather than invest the customers’ funds, the broker stole the money for his own personal use. To conceal his scheme, he: (i) instructed customers not to tell others about the purported fund investment; (ii) provided some customers with fake account statements reflecting fictitious returns; and (iii) made over $400,000 in Ponzi-like payments to certain of the customers.


FINANCIALISH TAKE AWAYS.    In July 2018, FINRA barred the broker for failing to respond to FINRA requests for information. As of December 3rd, the SEC banned this individual from the industry, as well. The regulators’ actions took place after the broker agreed in 2018 to settle various customer disputes for damages arising out of his scheme. In all, 10 customer disputes were settled in 2018 for over $4 million. an 11th is pending, for $750K in alleged damages. [As per FINRA Broker Check.]