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."


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