August 11, 2014
It's a common refrain from elderly victims of financial services fraud. He was a lovely young man. She was like a daughter to me. He changed the light bulbs in my home and brought me groceries. She picked up my mail and took care of the pesky forms. And as these con artists in friends' clothing made their way into the victims' homes, no less than former undercover Wall Street regulator Elvis Presley wisely warned:
Not idle chatter nor the catchy stanza of a pop hit, the King's question had a purpose; namely, to alert senior citizens to the possible ulterior motives of stockbrokers, investment advisors, and bankers who might seemingly befriend them for truly nefarious goals. In the end, as Elvis would so often croon, suspicious minds are often the best first-line of defense against elder fraud.
So, if an old friend I know
Would I still see suspicion in your eyes?
Case In Point
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Respondent submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. AWC 2014041710401, August 5, 2014. [NOTE: Name of respondent redacted at the sole discretion of BrokeAndBroker.com on January 23, 2015.]
Respondent first became registered in 2011; and by July 8, 2013, he was employed with Wells Fargo Advisors, LLC. The AWC asserts that he had no prior disciplinary history in the securities industry.
I'll Supersize That Today
The AWC asserts that on March 31, 2014, Wells Fargo issued a $1,366 dividend check payable to an elderly customer and her deceased husband, the couple had maintained a joint brokerage account. Several days later, Respondent allegedly visited the elderly customer's home and was instructed by the customer to deposit the dividend check in the joint account. Although Respondent took the check, sometime around April 29, 2014, he signed the customer's name (without authorization) on the dividend check and deposited the instrument into his own personal bank account; and, thereafter, converted the funds for his personal use through what the AWC characterizes as payments to "local eateries" and also in the form of cash withdrawals.
Around May 7, 2014, an insurance company issued an $8,230 check made payable to the elderly customer; and, yet again, Respondent visited the customer's home, where she instructed him to deposit the funds in her Wells Fargo brokerage account. Once again, around May 20, 2014, Respondent signed the customer's name on the check (without authorization) and attempted to deposit the funds into his personal account. This time, however, the AWC asserts that the bank became suspicious and refused to complete the deposit.
Following the rejection by the bank of the attempted May deposit, the AWC asserts that Respondent repaid to the elderly customer the first check.
Online FINRA records as of August 7, 2014, indicate that Wells Fargo Advisors, LLC "Discharged" Respondent on June 17, 2014, based upon allegations that:
EMPLOYEE WAS DISCHARGED FOR DEPOSITING ONE CHECK AND TRYING TO DEPOSIT A SECOND CHECK PAYABLE TO A CLIENT INTO THE EMPLOYEE'S PERSONAL ACCOUNT AT A NON WELLS FARGO BANK. THE CLIENT HAD GIVEN THE EMPLOYEE BOTH CHECKS TO DEPOSIT INTO THE CLIENT'S ACCOUNT AT WELLS FARGO ADVISORS LLC.
FINRA deemed Respondent's conduct as constituting violations of FINRA Rules 2150(a) and 2010. In accordance with the terms of the AWC, FINRA impose a Bar from association with any FINRA regulated broker-dealer in any capacity.
Bill Singer's Comment
A few minor quibbles and then one huge compliment to FINRA.
In the AWC, FINRA asserts that:
On March 31,2014. the Firm issued a dividend check (the First Check") payable to the Customer and her deceased husband from their joint brokerage account maintained at the Firm for approximately $1,366.
I'm not sure about the accuracy or mechanics of that transaction. For starters, if the account were a Joint Tenants With Rights Of Survivorship ("JTWROS"), which is often the status of a marital account, then the account is normally changed to an individual account in the name of a surviving spouse. Now, to be clear, not all joint accounts are JTWROS but the norm in the industry is to update the account title following notice of death. Consequently, I'm not clear as to what the AWC referenced when saying that the dividend check came from the couple's joint account - one possible explanation is that the husband had only recently died and the dividend was paid into the joint account before his death or was paid out of the joint account prior to it being updated. In any event, not a major issue but one that should be clarified in the AWC.
Of a bit more importance is the issue of what the elderly customer actually knew and had authorized. Clearly, she had authorized Respondent to deposit the two checks at issue into her personal account but not into his. That being said, how did the customer expect the two checks to be deposited absent her endorsement? The AWC seems to make it quite clear that
without the Customer's knowledge or consent, [Ed: Respondent] signed the Customer's name . . .
on both checks. While hardly mitigating in light of Respondent's conversion of the first check and his attempted conversion of the second check, it is still an important fact as to whether the customer expected the stockbroker to sign her name on the deposited checks. Once again, this is the type of issue that should have been clarified in the AWC.
Notwithstanding the two concerns noted above, I compliment FINRA on aggressively investigating and resolving this matter. The AWC is dated August 5, 2014, and the alleged misconduct occurred between March and May 2014. Given the involvement of an elderly customer, such a prompt regulatory effort best protects the investing public and eliminates from Wall Street individuals who probably should not be handling customer's funds.