Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with brokers who’ve fleeced clients. This is a sad occurrence, but sometimes brokers take advantage of clients and steal their money. We’ve investigated countless cases when this has happened.
The instances are all too familiar to us: Usually it’s elderly, retired women who are preyed upon. A recent case involving a 73-year-old client is a case in point. A former LPL broker, Matthew O. Clason, of Chesire, Connecticut, is accused of stealing more than $300,000 from the client, “with whom he formed a personal relationship.” Clason, who had been a registered broker since 2004, sold securities from his client in 45 transactions over the last 20 months, the SEC said in its suit filed against the broker.
“He transferred about $330,000 [from proceeds of the sales of client assets] to a joint checking account they had opened at a large national bank, funding most of it through securities sold from a non-retirement account that charged the client 1.54% of her assets under management,” the SEC reported. The agency is requesting “that the court enter an order freezing Clason’s assets and requiring an accounting. The SEC also seeks permanent injunctive relief, disgorgement plus prejudgment interest, and civil penalties.” Clason, who was registered with LPL and Integrated Wealth Concepts, could not be reached for comment, according to AdvisorHub.com. He was fired by LPL on August 13 for failing to comply with firm policies with respect to handling client funds, the SEC said.
What’s clear is that the modus operandi of a predatory broker follows some predictable patterns. First, they gain the trust of a client, who is usually elderly and may not have the cognitive capacity to understand what’s happening. Then the broker starts either trading securities in the portfolio to generate commissions, which is called “churning,” or transfers the money into separate accounts that they control. They may even buy un-authorized investments that pay high commissions.
There’s little question that older investors are specifically targeted by brokers for fraud. “Seniors were at higher risk of fraud, as most of the senior abuse cases reported (45 percent) involved customers in the 81-90 year age group,” according to a study by the North American Securities Administrators Association (NASAA). That finding was confirmed by NASAA’s Pulse Survey, in which regulators overwhelmingly identified the “Silent Generation,” (ages 70 and older) as the most vulnerable to financial fraud.
As a family member, friend or neighbor, there’s much you can do to be vigilant against senior broker fraud. Tell them to avoid “free lunch” financial seminars and unsolicited phone or mail contacts for financial advice or estate planning. NASAA also has abundant resources at its Senior Resource Investor Center.
Have you invested with brokers who have sold you inappropriate investments, churned your account, or transferred your assets? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. They also could be engaging in fraudulent activity. Firms are also legally required by FINRA to monitor and supervise what their brokers are selling – their investments must be vetted and authorized by the firms – and have an obligation to investors to fully reveal true risk and return information about the vehicles sold. Investors can file FINRA arbitration complaints if these rules are broken.
If you invested with a broker-advisor and lost money as a result, you may have a claim to pursue through FINRA Arbitration. Please contact Stoltmann Law Offices, P.C. at 312-332-4200 for a free, no obligation consultation with a securities attorney. Stoltmann Law Offices is a contingency fee law firm which means we do not get paid until you do!