According to FINRA, Raymond James and Associates, Inc. (Raymond James) stockbroker Paul David Arnold (Arnold) misappropriated and misused funds of an 88-year-old customer. The regulator alleged that during the period May 2010 through April 2011 that Arnold, a stockbroker in Raymond James' Largo, Florida office, had customers sign blank checks that Arnold later made payable to his own wife and son without the customer's authorization. FINRA found that Arnold misappropriated and misused $173,600 in customers' funds. Arnold did not contest the charges and failed to appear for testimony on two separate occasions. The customer received an arbitration award against Arnold and appears to have settled his claim against the broker-dealer. Arnold has been permanently barred from serving in any capacity in the securities industry.
This is just another case of elder abuse, a crime that is becoming more and more prevalent as our population ages. The customer was an 88-year-old widower who placed blind trust in a Raymond James stockbroker to help him with his financial affairs. Family members and friends must be vigilant for abuse of their elders by financial advisors. There is too much opportunity for financial advisors to take charge of their clients' finances. Stockbrokers are generally not permitted to take discretion over customers' accounts, even with written authority which is absolutely required if they do so. Stockbrokers are also prohibited by firm's policies and procedures from serving as trustees of clients' trusts without their employers express authorization. This is because discretionary accounts and trustee relationships are avenues for abuse.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement a reasonable supervisory system, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to broker misappropriations such as those misappropriations allegedly committed by Mr. Arnold can bring forth claims to recover losses against Raymond James & Associates, which could have prevented brokers from committing illegal activity.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. Please see our Instablog profile (left column) for ways to contact us and get answers to any of your questions about this blog post and/or any related matter.