Chicago-based Stoltmann Law Offices has represented investors who’ve suffered losses from dealing with financial advisors who’ve stolen their money. Can a financial adviser ask you to pay him personally to buy investments? If he does, it may be considered theft. Former NY Life Securities broker Jeffrey Scott Anderson was barred by FINRA, the federal securities industry regulator, after he was accused of stealing approximately $26,600 from an elderly client.
According to FINRA, “Anderson convinced an elderly NYLife customer to write five checks totaling $26,600 from October through December 2019 to him personally to purchase investments and insurance. Rather than using the funds for those purposes, FINRA claims that he deposited the money into his bank account and paid personal expenses.” Anderson resigned in March 2020 after “an internal review raised a number of concerns regarding the quality of his business, including repeat replacement and suitability concerns and undisclosed customer complaints.”
Later that year, NY Life disclosed two other customer complaints against him, including one from a customer who provided NYLife with “copies of three personal checks…which were made payable to and endorsed by [Anderson] totaling $16,500.” After he left NY Life, Anderson’s BrokerCheck profile showed other customer theft issues: “Anderson became registered with Pruco Securities but was fired less than three months later for misappropriating funds from a customer while associated with another FINRA member and submitting altered documentation to company investigators during its internal investigation.”
How can you protect yourself from financial adviser exploitation? FINRA recommends investors put several safeguards in place:
- Holds on Funds When Suspicious Disbursements are Made. If a firm suspects financial exploitation, it may put a hold on disbursements from a client’s account for up to 15 business days. The firm must conduct an investigation and attempt to notify the client and the client’s trusted contact.
- Add a “Trusted Person.” When you open a brokerage account or update information related to an existing account, a FINRA rule requires your broker to “make reasonable efforts to obtain the name and contact information for a designated trusted contact person for your brokerage account. Among other things, adding a trusted contact person to your account puts your broker in a better position to keep your account safe.”
- Referral to Other Agencies. If the firm gathers information that supports its suspicion of financial exploitation, it may continue the hold on disbursements for another 10 business days. Depending on what its investigation finds, the firm may refer the matter to an adult protective services or law enforcement agency.
Have you invested with brokers who requested money be paid to them personally, sold you money-losing or overpriced investments, or traded without your permission? FINRA and the SEC have strict rules on disclosing risk profiles on all investments sold by brokers and investment advisers. If they fail to fully inform you of downside risk or vet shady companies offering investments, you may have a case in arbitration.
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. Broker-dealers and advisors are also required to fully vet all of the investments they are selling to determine if they are suitable for your age and risk tolerance. 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!