Stockbrokers should not borrow money from their clients. That’s according to FINRA Rule 3240, which states that unless the stockbroker is an immediate family member or their firm has specific written procedures about borrowing and lending, then borrowing from a customer constitutes a violation.
Silver Law Group helps investors recover money lost to stockbroker misconduct and elder financial fraud. Contact us today for a no-cost, confidential consultation at 1-800-975-4345.
Although prohibited, stockbrokers do still borrow and misappropriate from their customers. Sometimes it is from an older client who does not understand what is happening or cannot consent, which can be considered elder financial fraud.
The Financial Industry Regulatory Authority (FINRA), the organization which regulates the conduct of stockbrokers, generally prohibits brokers from borrowing money from their customers. FINRA rule 3240 mandates a broker cannot borrow money from a customer unless the firm has supervisory systems that allow for the borrowing and the loan is disclosed to the firm or other limited circumstances such as a business relationship.
Two brokers have recently been barred by FINRA for misappropriating funds from their client’s accounts:
Frederick Markley Stow (CRD# 864436) is a barred broker who was last registered with Raymond James & Associates (CRD# 705) in their Franklin, Tennessee branch office. Stow was previously registered with Wells Fargo Advisors, LLC (CRD# 19616) and Suntrust Investment Services (CRD# 17499). He had been in the securities industry since 1979.
Stow’s publicly-available FINRA BrokerCheck report lists three disclosures:
October, 2019: Stow was indefinitely barred in all capacities from associating with any FINRA member after he failed to respond to a FINRA request for information. The action came after Stow failed to request termination of his suspension in time.
July, 2019: A customer dispute alleged that Stow misappropriated funds from a client’s account and requests $911,500 in damages. The dispute is pending as of this writing.
May, 2019: Stow was discharged from Raymond James & Associates, Inc for allegations of misappropriating funds from customer accounts.
Mark Bradford Weatherell (CRD# 1373405) is a currently barred broker who was last registered with Kovack Securities Inc (CRD# 44848) in their Summerville, South Carolina branch location. Before working for Kovack, Wetherell was a registered representative of Invest Financial Corporation (CRD# 12984) and Investacorp, Inc. (CRD# 7684). He had been in the securities industry since 1985.
Wetherell’s publicly-available FINRA BrokerCheck report lists six disclosures:
October, 2019: Wetherell was indefinitely barred in all capacities from associating with a FINRA member after failing to respond to a request for information.
August, 2019: Wetherell was discharged from Kovack Securities, Inc. for an allegation that he “borrowed money from a client and failed to repay all of the funds.”
March, 2003: A customer dispute alleged “unsuitable treatment of account, excessive trading, unsuitable technology shares, inappropriate use of margin, and high level of trading leading to higher personal taxes.” $400,000 in damages were requested, and the case settled for $275,000.
June, 2002: A customer dispute alleged “the broker persuaded them to invest more aggressively in technology stocks that was not suitable for their conservative investment needs.” The case settled for $50,000.
June, 2002: A customer dispute alleged that “investment in technology stocks were not appropriate.” The case settled for $20,000.
September, 1996: A customer dispute alleged that “recommended to a client…to purchase approximately $400,000 of high risk limited partnerships.” The case settled for $20,000.
Did Your Broker Borrow Money From You?
If your broker borrowed from you and failed to repay it, we may be able to help you recover your losses.
Silver Law Group represents investors in securities and investment fraud cases. Our nationally-recognized lawyers represent investors nationwide and around the world to help recover investment losses due to stockbroker misconduct. Our attorneys have handled many cases of elder financial abuse against brokerage firms, banks and fiduciaries.
If you have any questions about how your account has been handled, call for a no-cost consultation with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that nothing is owed unless we recover money for you. Contact us today and let us know how we can help.