Christopher Shawn Vaughn, a former Leesburg, Florida broker employed at Atlanta, Georgia-based SunTrust Investment Services, Inc., was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint alleging that he engaged in a scheme to convert securities owned by an elderly customer. Without the customer's knowledge or consent, Mr. Vaughn allegedly made his wife the primary beneficiary of the customer's brokerage account. When the account was opened, Mr. Vaughn allegedly did not inform his immediate supervisor, or any other supervisor at his member firm, that his wife was the beneficiary. As part of his efforts to hide his misconduct, Mr. Vaughn allegedly provided a false mailing address for the customer on her application, which was for a post office box belonging to his wife's grandfather, preventing the firm from delivering monthly account statements and trading confirmations to the customer at her actual residential address. The complaint alleges that after opening her account, Mr. Vaughn recommended and sold the customer a fixed annuity contract for $10,000, and the customer informed Mr. Vaughn that she wanted her neighbor to be named as the annuity's beneficiary. The firm did not find any documentation evidencing the customer requested Mr. Vaughn's wife to be named as a beneficiary on either the account or annuity. The firm terminated Mr. Vaughn's employment in connection with this matter, and Mr. Vaughn and his wife executed a Mutual Release and Settlement Agreement with the firm, agreeing to transfer the assets held in the wife's account back to the customer's account or an account maintained in the name of the customer's estate. Mr. Vaughn's conduct resulted in the alleged conversion of $22,417.58 in assets from the customer.
Broker-dealers must establish and implement a reasonable supervisory system to protect customers from broker misconduct. If broker-dealers do not establish and implement these protective measures, they may be liable to investors for damages flowing from the misconduct. Therefore, investors who have suffered damages due to conversion of assets by their broker can bring forth claims to recover damages against broker-dealers like SunTrust Investment Services, Inc., which should consistently oversee its brokers' activities in order to prevent the above-described prohibited conduct.
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.