John William Cutshall (CRD #874352) is a registered broker and former registered investment advisor currently employed with Lombard Securities Incorporated (CRD #27954) of Woodsboro, MD. His previous employers include Morgan Stanley (CRD #149777), RBC Capital Markets, LLC (CRD #31194) and Ferris, Baker Watts, LLC (CRD #285), also of Frederick, MD. He has been in the industry since 1979.
Cutshall has four recent disclosures in his record. The most recent is a pending FINRA disciplinary complaint filed by their Department of Enforcement on 8/10/2018 (the full complaint is available here.) His actions are described in detail regarding the misappropriation of trusts that he was administering for three individuals. Between 2012 and 2014, Custshall abused his position for these trusts (for one elderly woman and a now-deceased married couple), converting and improperly using funds from the trusts.
The trust provided for the couple’s disabled daughter, who was in a residential facility for intellectually disabled individuals. When the daughter died in 2012, Cutshall used his position as a trustee to write 34 checks from the trust for a total of $400,000. These checks were deposited into his own bank account. Cutshall then presented an unwitnessed handwritten note that was allegedly written by the deceased husband, but not the wife. The note named Cutshall as a 50% beneficiary, defending his converting of funds from the trust. He took a total of $463,000, which was more than he was entitled to, assuming the note was genuine. Cutshall never disclosed this note until 2013, and failed to disclose to two firms that he was a client’s trustee.
From another elderly customer’s trust for which he was a trustee, Cutshall used a check to transfer $2,000 to Charlestown Gaming in West Virginia for gambling. He repaid the monies after being contacted and questioned by a compliance employee for the firm. He also thwarted the employer firm’s efforts to supervise his activities by failing to disclose that he had been named as a beneficiary for a trust where he had been a trustee, and made misrepresentations in his yearly compliance questionnaires at two member firms. FINRA is requesting full restitution and disgorgement of all funds from both trusts.
The next disclosure, filed by the Federal Deposit Insurance Corporation (FDIC) on 12/15/2017, indicates that Cutshall was a director at the Woodsboro Bank, and alleges that he “engaged or participated in certain unsound or unsafe practices related to certain Maryland testamentary trusts for which he was trustee resulting in personal gain to him and/or financial loss to the bank.” Although the only sanction was prohibition, there were no monetary or other sanctions imposed, nor any limits or restrictions on his brokerage or advisory services.
On 4/27/2016, Cutshall had a dismissal of a bankruptcy proceeding.
Cutshall was dismissed from Morgan, Stanley on 5/19/2014 after writing a check from a client’s account. His defense was that he thought it was his personal checkbook, and reported it to the firm when he discovered the error. However, this action may also be covered in the FINRA disciplinary complaint.
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