“As alleged in our complaint, Stow took advantage of these seniors, abusing his access to their brokerage accounts to generate income for himself,” said Justin Jefferies, assoc. regional director, SEC’s Atlanta regional office. The SEC seeks the return of alleged ill-gotten gains, interest, injunctive relief, and a penalty.
Federal prosecutors also filed criminal charges against Stow.
Frederick Stow Alleged To Have Misappropriated Money From Elderly Customers
Frederick Stow’s publicly-available FINRA Broker Check report details the allegations made by the SEC:
“This case concerns the systematic theft of two elderly brokerage customers’ funds by their registered representative over the course of more than three years. Stow sold securities from the individual retirement account (“IRA”) of Customer A. Stow then forged wire transfer letters of authorization to transfer the proceeds of the securities sales to his own bank account without Customer A’s knowledge or consent. Within weeks after Customer A passed away at the age of 98, which resulted in the account being frozen, Stow began misappropriating funds from Customer B, another elderly customer.”
The complaint states that Stow admitted to stealing the money after multiple requests for an explanation of the wire transfers from Customer A’s executor.
Customer A was a veteran who served in the World War II era. According to the SEC, “Stow inserted himself into the personal and financial affairs of Customer A…In the later years of Customer A’s life, he frequently visited Customer A’ at his home, where he lived alone but received full-time nursing care.”
The complaint alleges Stow made 74 unauthorized wire transfers from Customer A’s account to his bank account, which totaled $911,500. The other $32,000 was misappropriated from Customer B.
Frederick Stow Disclosures
In addition to the civil disclosure regarding the SEC’s lawsuit, Frederick Stow’s record also lists three other disclosures, all apparently related to the alleged misappropriation from the two customers:
October, 2019: Stow was barred from associating with any FINRA member in all capacities after failing to respond to a request for information.
July, 2019: A customer dispute alleged that Stow misappropriated funds from a customer’s account. $911,500 in damages are requested, and the dispute is pending as of this writing.
May, 2019: Stow was terminated from Raymond James & Associates, Inc for allegations of misappropriating funds from customer accounts.
Stockbrokers Are Not Supposed To Borrow From Clients
According to FINRA Rule 3240, stockbrokers should not borrow money from their clients unless they are an immediate family member or their firm has specific procedures about borrowing and lending. Otherwise, borrowing from a customer is a violation.
Unfortunately, brokers do borrow and misappropriate from customers. Many cases of this conduct have involved older clients who did not understand or have the capacity to consent, which could also be considered elder financial fraud.
Did Your Broker Misappropriate Money From You Or Your Family?
If your broker misappropriated or improperly borrowed money from you or your family, our firm may be able to help recover your losses.
Silver Law Group represents investors in securities and investment fraud and elder fraud cases. Our nationally-recognized lawyers represent investors nationwide and around the world to help recover investment losses due to stockbroker misconduct. Our attorneys have handled cases of elder financial abuse against fiduciaries, brokerage firms, and banks.
If you have questions about your account, call for a no-cost consultation today. Most cases are handled on a contingent fee basis, meaning that nothing is owed unless money is recovered for you. Contact us today.