BROWSE BY TOPIC
- Investments - Unsuitable
- Investments - Strategies
- Investments - Private
- Investor Protection
- Bad Advisors
- Bad Brokers
- Boiler Rooms
- Regulatory Sanctions
- Wall Street News
- Rules & Regulations
- Terminations/Cost Cutting
- Compliance Concepts
- General News
- Donald Trump & Co.
- Big Banks
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
Was Broker Done-In By Negligence and a Customer's ‘Bait and Switch’ Tactics?
by Howard Haykin
In March 2017, a broker was fired by Morgan Stanley for executing transactions in a customer’s IRA account based upon instructions he received from the customer’s wife – which she was not authorized to provide. Over a 4-year period (January 2013 through March 2017), the broker reportedly traded mutual funds in the husband’s IRA account, and he facilitated 32 distributions (totaling $317,000) from the IRA to the couple’s joint bank account.
The broker also received a $5,000 fine and a 90-day suspension from FINRA, the securities regulator – which seemed justified (if not somewhat light) given the fact he was negligent in accepting instructions from an unauthorized individual, regardless of her relation to the account holder.
"Completing the tri-fecta," the customer filed legal action against the broker in October 2017, claiming $1.9 million in losses from unauthorized trading and withdrawals from his IRA account by the wife and the broker over a 7-year period - from 2010 to 2017. That case is pending.
SUSPICION AROUSED, ALONG WITH A PARALLEL. Though I profess no sympathy for the broker in his yet-to-be-resolved case with the husband, I’m left with some nagging doubts about the customer (husband) and his possible motives for filing claims against the broker. SPECIFICALLY ...
- How do we get from $317,000 in unauthorized in distributions (FINRA’s findings) to his claim for $1.9 million in losses?
- How is it possible that, over a 7-year period, he never noticed any large, unusual and/or apparently unauthorized transactions in his IRA account or the couple’s bank account?
- Is it possible the customer and his wife sought to ‘bait and switch’ the broker - just as another couple had done years earlier when they had incurred significant "unauthorized trading losses?" Here's how that earlier couple's case played out:
[For further details on the featured case, click on FINRA Case #2018057579701.]