October 21, 2014- Robert J. Head, a broker registered with Stifel, Nicolaus & Company, Inc. from 9/2008-1/2014 , submitted a Letter of Acceptance, Waiver and Consent No. 20130389574 (“AWC”) with the Financial Industry Regulatory Authority (FINRA) to resolve allegations that he made excessive and unauthorized unsuitable trades in the account of an elderly client who was diagnosed with dementia.
The AWC was submitted by Head without admitting or denying the findings and without adjudication of any issue of law or fact. Head was permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public.
FINRA found that Head exercised discretion (which means that he traded without authority) and recommended transactions that were qualitatively and quantitatively unsuitable for the customer in violation of NASD and FINRA rules.
The conduct FINRA found to be violative includes:
- Head traded the account actively, often choosing high risk products. In March 2010, the company sent a letter to the client indicating that 385 trades had occurred in her account during the prior 12 months and that the account at the time of the letter had 25 open short positions.
- During 2010, there were 155 trades by Head, with a value of $250,000 which generated commissions of $41,000 and losses to the client of $13,500
- In June 2012, the company sent a letter to the client asking her to ratify the trading for the prior year. That trading included 275 trades, generating commissions of nearly $30,000 and losses of $70,000.
- The client was born in 1936 and in 2013 at age 77, was diagnosed with dementia.
Unless you have given written authority to the broker authorizing the trading of your account, the broker is required to obtain your permission prior to making trades in your account.
If you receive a letter from the brokerage firm asking you to confirm and ratify the trading that has occurred in your account, make certain that you carefully review the trading before signing and returning that letter.
Rex Securities Law provides nationwide representation to investors seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.
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