Finra bars broker who churned account of 93-year-old client with dementia

In a four-year-period, Mark Kaplan executed 3,500 trades that resulted in $723,000 in losses

A veteran broker was barred by Finra for churning the account of a 93-year-old retired clothing salesman who suffered from dementia.

Broker Mark Kaplan was accused by the Financial Industry Regulatory Authority Inc. of creating $723,000 in trading losses in the client’s account over a four-year-period and generating almost an equal amount of commissions and mark ups for himself the adviser and his employer, Vanderbilt Securities, according to a settlement posted online Wednesday.

Mr. Kaplan started working at Vanderbilt in Woodbury, N.Y. in March 2011, after being fired from Morgan Stanley, according to his BrokerCheck report. Morgan Stanley fired Mr. Kaplan “as a result of a client complaint and other concerns regarding activity in client accounts,” the report stated.

Between 2011 and 2015, Mr. Kaplan “engaged in churning and unsuitable excessive trading in the brokerage accounts of a senior customer,” according to the Finra settlement.

The unnamed client had about $508,000 at the end of March 2011 in his investment account, and Social Security payments were his only source of income, according to Finra. During the period Mr. Kaplan controlled the account, the customer had a decline in his mental health and was diagnosed with dementia, according to Finra.

Over the four-year time period, Mr. Kaplan, engaged in a stunningly harmful trading pattern, according to Finra, making more than 3,500 trades in the client’s accounts. Those resulted in about $723,000 in trading losses and $735,000 in commissions and mark ups for Mr. Kaplan and Vanderbilt.

Mr. Kaplan “never discussed with [the elderly client] the extent of his total losses or the aggregate amount he paid in sales charges and commissions,” according to Finra.

In April 2015, the court granted an application by the elderly client’s nephew to act as his legal guardian and manage his financial affairs, according to Finra.

Over his 29-year career in the securities industry, Mr. Kaplan had seven closed customer disputes on his BrokerCheck profile, with firms paying clients settlement ranging from $11,500 to $500,000 in response to various client complaints, according to BrokerCheck.

Mr. Kaplan, who agreed to be barred from the securities industry as part of the Finra settlement, could not be reached for comment. He resigned from Vanderbilt last month, according to Finra.

The CEO of Vanderbilt Securities, Stephen Distante, was traveling and could not be reached for comment. The firm is based on Long Island.