The recent media report on the alleged misdeeds of a broker might establish a new low. The Financial Industry Regulatory Authority Inc. accuses a broker of putting a “deceptive and fraudulent scheme” in which he churned the account of an elderly, blind widow.
The churning scheme generated commissions of $248,000 for the broker over a 3-year period, according to the report. The 77-year-old widow suffered net losses of $184,000, Finra says.
As regular readers of our Lexington securities fraud blog know, churning involves excessive trading in an account done solely to generate broker commissions.
The New York City broker in this case allegedly churned the woman’s account from late 2012 until March of this year. Finra recommends action against the broker for willful violations of securities laws.
The broker worked for his client and her now-deceased husband since 1995. Things apparently changed upon the husband’s 2012 death, which is when Finra says the churning began.
According to the report, the broker placed more than 700 trades with a commission of 2.5 percent to 3 percent on each one from October 2012 to December 2015. The broker then changed firms, with the churning continuing.
However, his commissions rose to 3.75 percent to 4.25 percent at his new firm. Finra says there is “little to no possibility that the customer would profit from such trading.”
For those who discover they have been defrauded by an unscrupulous stockbroker, a conversation with a Lexington attorney experienced in asset recovery can help clarify your legal options.
On behalf of MihalekLaw posted in Securities Law on Thursday, August 4, 2016.