On behalf of Mihalek Law posted in Securities Law on Friday, March 13, 2015.
In our last post we wrote about the actions Financial Industry Regulatory Authority has taken in response to the number of cases of elder abuse it saw in 2014. According to a recent study there was an increase in the number of fines that FINRA imposed related to this activity last year. In this post we provide an example of a situation that could prompt such an action.
Last month a 37-year-old securities broker was criminally charged after he allegedly took $1 million from a retired couple. The theft allegedly occurred when the broker convinced the couple through false representation that the hedge fund he created shortly before contacting them was a much safer investment strategy than opting for a mutual fund. He also reportedly told them that they would earn a high rate of return and be able to keep an eye on their investment via a third party administrator monthly report.
The couple gave him $1 million to invest.
Instead of placing the money in the recently created hedge fund, the broker is accused of using it in highly speculative and aggressive trading. He is accused of losing the money in several months. He did not inform them of the loss however until close to a year had passed.
The broker has been charged with:
Grand Larceny in the First Degree
Securities Fraud under the Martin Act
In addition to potentially facing 25 years in prison the man could face legal action if the retired couple seeks to recoup their loss. In pursuing this course of action a lawyer can be of assistance.