Finra panel bars broker for defrauding elderly client

Rep ordered to pay $245,000 in fines and restitution; Legend Securities fined $200,000

Nov 9, 2017 @ 3:00 pm

By InvestmentNews

The Financial Industry Regulatory Authority has barred broker Hank Mark Werner of Northport, N.Y., for fraudulently churning and excessively trading the accounts of a blind, elderly widow and for making unsuitable recommendations.

The Finra hearing panel also ordered Mr. Werner to pay more than $155,000 in restitution to the widow, fined him $80,000 and ordered disgorgement of more than $10,000 representing commissions received for recommending the purchase of an unsuitable variable annuity. The decision resolves charges brought by Finra in August 2016.

Finra also said that Legend Securities, the firm that supervised Mr. Werner and was named in an amended disciplinary complaint, failed to respond. As a result, it was held in default, and Finra censured and fined the firm $200,000. Finra charged that Legend failed to reasonably supervise Mr. Werner, which allowed him to engage in churning his customer's account. Finra said that Legend voluntarily paid $20,000 in partial restitution to the customer.

According to a Finra release, Mr. Werner engaged in more than 700 trades from October 2012 to December 2015, generating approximately $210,000 in commissions while the customer — who was 77 and in ill health — lost more than $175,000 as a result of his "reckless trading."

The decision also noted that it was apparent to the hearing panel that "Werner took advantage of [the customer's] vulnerability after her husband died in September 2012. Werner's sole motivation was to use [the customer's] accounts to generate commissions to cover his financial liabilities, not make money for his client."

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

What it took to win an Excellence in Diversity & Inclusion Award

Editor Fred Gabriel and special projects editor Liz Skinner explain how InvestmentNews chose the winners of our inaugural Excellence in Diversity & Inclusion Awards.

Latest news & opinion

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Ameriprise to pay $4.5 million to settle SEC charges that five reps stole more than $1 million from clients

Agency censures firm for not protecting clients from thieving brokers.

SEC slaps Lockwood with $200,000 fine over unseen trading costs to clients

Clients were forced to pay fees in addition to the usual wrap charges, the regulator maintains.

Gotcha! 10 lessons from brokers gone bad

These cases show why regulators nabbed reps and firms, and how to avoid their fate.

Tax-credit investigation may trip up Wells Fargo

Justice Department is investigating bank's dealings in tax credits for low-income housing, sources say.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print