This is a follow up to our last blog post: 5 Warning Signs of senior Investment Fraud and Elder Financial Abuse. Summarized below are three very recent examples of enforcement actions by the Financial Industry Regulatory Authority (FINRA) that illustrate the growing problem of elder financial abuse and the situations that can arise when stockbrokers take advantage of their most vulnerable clients.
Excessive Trading: In what appears to be a slap on the wrist, FINRA suspended a broker for 8 months for engaging in excessive short-term trading in several elderly client accounts, including a 95-year old widow who lost $283,000 and a couple in their 70s who lost $239,000. They were each charged more than $260,000 and $210,000, respectively, in commissions and markups. The broker, who was fired by UBS Financial Services, was not required to pay any fine or restitution to his victims—perhaps due to his bankruptcy filing. In August 2019, the broker’s suspension will be lifted and he can resume working as a stockbroker.
Control of Customer Accounts: A stockbroker formerly affiliated with LPL Financial was permanently barred for her role in taking control over two customer accounts and misappropriating funds. According to FINRA, the broker received $9,000 from a terminally ill client after inducing him to name her as the beneficiary of a “transfer-on-death” bank account. The broker also received over $60,000 following the death of an elderly client that had named the broker as a joint owner on their bank account; and another $248,000 as a beneficiary of the customer’s estate. None of these clients were family members of the broker.