Securities Arbitration Lawyers Blog

How to Spot Elder Financial Fraud (and How Ethical Financial Advisors Should Act to Stop It)

May 26, 2017 | Silver Law Group

Advisors and other trusted professionals have an ethical duty to stop senior financial fraud

Elder financial fraud is an increasingly serious issue in the U.S. As more Americans become seniors – at the rate of about 10,000 a day – new victims across the country are feeling the consequences. This means that whether you’re a financial advisor, accountant, or lawyer with elderly clients, or you simply have older friends or family members, it’s essential to understand the warning signs of senior financial fraud. By doing so, you may be able to help protect the seniors you care about from serious monetary losses as well as the associated emotional damage when someone becomes a victim.

FINRA has made several recent changes in order to help advisors combat senior fraud

Elder Financial and Investment Fraud Continues to Grow at an Alarming Rate

May 26, 2017 | Silver Law Group

Research suggests nearly 40% of American seniors may experience financial abuse

Across the U.S., millions of seniors each year become the victims of fraudulent financial and investment scams. In fact, one recent survey reported that 37% of senior caregivers said their client had been a victim of financial fraud or abuse – and alarmingly, 40% of caregivers surveyed said that their client had been victimized more than once. The perpetrators, many of whom are family members, often take advantage of a senior’s reduced mental capacity in order to persuade or pressure them into making serious financial mistakes.

To fix this problem, a variety of organizations, including state governments and nonprofits like AARP, have started initiatives to expand education for seniors, improve awareness and reporting among financial and healthcare workers, and increase the severity of punishment for those found guilty of elder fraud.

FINRA Bars Former Kovack Broker For Allegedly Naming Himself as Inheritor of 91-year-old Customer’s Condo

May 25, 2017 | Silver Law Group

FINRA has barred Fort Lauderdale, Florida-based broker Douglas W. Studer (CRD# 4440047) for refusing to testify on the record in a FINRA-led investigation into whether Studer violated his employing firm’s policy by being named in an elderly customer’s estate documents to inherit the customer’s waterfront condominium.

Studer was employed by Kovack Securities Inc. (CRD# 44848) until Kovack terminated him in July 2016, according to the Acceptance, Waiver and Consent (“AWC”) entered into between Studer and FINRA.

According to the AWC, FINRA began investigating Studer on August 2, 2016. Studer was asked to record testimony, but he refused to appear. Allegedly, Studer appeared on his 91-year-old customer’s estate documents and was to inherit the elderly customer’s waterfront condominium.

Silver Law Group Investigates Former Illinois Morgan Stanley Broker Terminated for Outside Business Activities

May 25, 2017 | Silver Law Group

Silver Law Group is investigating former Deerfield, Illinois-based Morgan Stanley Smith Barney broker Brian C. Sak (CRD# 3259830) after he was terminated for allegations that he placed customers in unapproved investments.

According to Sak’s FINRA BrokerCheck Report, he was terminated on May 17, 2016 by Morgan Stanley (CRD# 149777) due to concerns related to outside real estate investments with a client that was not appropriately disclosed to Morgan Stanley.

Additionally, Sak’s has two other disclosures in the form of FINRA arbitrations. The FINRA arbitrations, like Morgan Stanley, allege that Sak recommended investing in outside real estate investment opportunities. In total, the two FINRA arbitrations allege $600,000 in damages.

Former Tennessee Woodbury Broker Under Investigation Over Allegations of Outside Business Activities

May 25, 2017 | Silver Law Group

Silver Law Group is investigation former Tennessee-based Woodbury Financial Services, Inc. broker David A. Ross (CRD# 3021782) for allegedly failing to disclose an outside business activity and accepting loans from firm clients.

According to Ross’s FINRA BrokerCheck report, Woodbury Financial Services (CRD# 421) discharged Ross in April 2016 for the allegations listed above as well as other undisclosed firm violations.

Ross has seven other disclosures on his FINRA BrokerCheck report. Of those other seven, six of them are tax liens totaling over $250,000.

Silver Law Group Investigates FINRA-barred Florida Broker Who Allegedly Sold Away Customers

May 25, 2017 | Silver Law Group

Silver Law Group is investigation former Florida-based Fidelity Brokerage Services LLC (CRD# 7784) broker Michael J. DeBoer (CRD# 2114067) for allegedly conducting outside business activities without notifying Fidelity and losing his customers a great deal of money in the process.

According to DeBoer’s FINRA BrokerCheck, FINRA permanently barred DeBoer in May 2016 for allegedly recommending two customers collectively invest $200,000 in securities offered by a software development company. In exchange for the referrals, the company allegedly gave DeBoer $32,000 in compensation, while the customers ultimately lost all of their investments.

Additionally, the Acceptance, Waiver & Consent (“AWC”), found that DeBoer marketed to his customers and other potential investors the services of an entity that provided separately-managed futures trading accounts. The AWC states that DeBoer referred approximately 28 people to the entity and received $70,000 in return for his referrals. Most of the referred individuals lost a substantial amount of the money invested.

Misconduct-Riddled Former Ohio-based Broker Under Investigation Amidst Pending FINRA Arbitrations

May 25, 2017 | Silver Law Group

Silver Law Group is investigating former Ohio-based Concorde Investment Services, LLC (CRD# 151604) broker Larry S. Werbel (CRD# 828351) for three pending FINRA arbitrations and a litany of disclosures on his FINRA BrokerCheck report.

According to Werbel’s FINRA BrokerCheck report, Werbel has three pending FINRA arbitrations filed in the last four months that allege unsuitable recommendations, failure to supervise, fraud, breach of duty of loyalty, and negligence for an aggregate amount of over $1.25 million. At least one of the complaints alleges securities violations spanning back to Werbel’s employment with LPL Financial LLC (CRD# 6413) from February 2009 to February 2011.

FINRA’s BrokerCheck tool is a valuable way to examine a broker’s background. The investor tool discloses FINRA arbitrations that have been settled, are pending or have been denied; bankruptcies, civil judgments and tax liens; employment separations and other discharges; criminal proceedings; and regulatory actions. According to an InvestmentNews report, only about 12 percent of financial advisors have any type of disclosure events on their records.

Former Connecticut Broker Warren M. Rockmacher Under Investigation for Unsuitable Recommendations at Investacorp

May 25, 2017 | Silver Law Group

Silver Law Group is investigating former Connecticut-based Investacorp, Inc. (CRD# 7684) broker Warren M. Rockmacher (CRD# 2005652) after FINRA suspended and then permanently barred the broker.

Rockmacher currently has a FINRA arbitration pending that alleges unsuitable recommendations and misrepresentation with damages in the amount of $75,000.

On May 12, 2016, FINRA suspended Rockmacher for failing to comply with an arbitration award or settlement agreement or failed to respond to a FINRA request to provide information on the status of compliance. Two weeks later, FINRA barred Rockmacher completely from the securities industry.

Silver Law Group Investigates Aventura, Florida-based Michael R. Smith After UBS Termination

May 25, 2017 | Silver Law Group

Silver Law Group is investigating former UBS Financial Services Inc. (CRD# 8174) broker Michael R. Smith (CRD# 428405) after UBS terminated the broker.

UBS terminated Smith, based out of Aventura, Florida, in October 2015 after he failed to disclose to the firm that he was named trustee for the trust of an unrelated client on two occasions.

In May 2016, FINRA barred Smith from the selling securities after Smith failed to respond to a FINRA request for information.

Silver Law Group Investigates Former Law Vegas Broker Over Recent Cocaine-related Criminal Charges

May 25, 2017 | Silver Law Group

Silver Law Group is investigating former PFS Investments Inc. (CRD# 10111) Charles Little (CRD# 2632450) for felony criminal charges involving cocaine.

According to Little’s FINRA BrokerCheck report, Little was charged with five felony criminal charges on February 19, 2015. The charges are all drug-related, including selling and trafficking cocaine.

Upon discovering the felony cocaine charges, PFS discharged Little in May 2015, according to the FINRA BrokerCheck report. When Little failed to responded to FINRA’s request for information, FINRA permanently barred Little.