The Financial Industry Regulatory Authority Inc. on Thursday censured and fined J.P. Morgan Securities $200,000 for failing to reasonably supervise an ex-rep who made a series of unsuitable trades in the account of his wealthy grandmother, who was 88 and widowed when she opened her account.
The Finra action against J.P. Morgan Securities was the latest legal salvo in the case of the grandmother, Beverly Schottenstein, who last year won nearly $19 million in damages plus attorneys’ fees and costs in a Finra arbitration in which she alleged J.P. Morgan and two grandsons of mishandling her account.
Evan Schottenstein and Avi E. Schottenstein were the brokers in charge of the account but were not named in this settlement between Finra and J.P. Morgan Securities. A J.P. Morgan spokesperson on Friday confirmed the fine involved the Schottenstein matter.
The unnamed rep, or Evan Schottenstein, who has since been barred from the industry, was in charge of the account starting in 2014, when his grandmother moved $15 million in structured notes to J.P. Morgan Securities from her prior brokerage firm, according to the Finra order. J.P. Morgan's supervision of the adviser was inadequate for the next five years, according to Finra.
The rep — Evan Schottenstein — who was discharged, meaning fired, by J.P. Morgan Securities in 2019, invested the account heavily in structured products and exceeded firm limits, according to Finra. He also opened a phony email account in his grandmother's name and forged her signature on a $5 million private equity investment, according to Finra.
A spokesperson for J.P. Morgan Securities declined to comment further. Beverly Schottenstein eventually sued J.P. Morgan Securities in an arbitration overseen by Finra, and the panelists awarded her $18.6 million, with her grandson and the firm each ordered to pay $9 million in damages.
Structured notes are securities that are derived from or based on a variety of investments, from a single security, a basket of securities, to an index of other securities, and are linked to derivatives. Structured products may feature a guarantee of principal but carry risk and can lack liquidity.
From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.
Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.
“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.
Sellers shift focus: It's not about succession anymore.
Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
