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Finra Bars Broker Over Unauthorized Trades

By Alex Padalka March 6, 2017

Finra has barred a former K.C. Ward Financial registered rep whom it says made $15 million in unsuitable and unauthorized trades in an elderly client’s account, according to a press release from the industry’s self-regulator.

Craig David Dima allegedly sold off almost all the holdings his 73-year-old retired client had accumulated in his company stock, Finra says in the press release. The unnamed client had worked at Colgate-Palmolive for 28 years and considered the company stock a good source of dividends and long-term growth, and had told Dima not to sell it, according to the regulator.

But the rep allegedly sold the stock 11 times and when cornered by the client, told her the trades were caused by computer errors, and bought the stock back, Finra says. As a result, the customer paid Dima $375,000 in fees, mark-ups and mark-downs, while losing out on “substantial” dividends in the process, according to the press release from the regulator. Finra also alleges Dima’s trades in Colgate were unsuitable and broke rules on excessive mark-ups and mark-downs, the regulator says.

Finra acting head of Enforcement Susan Schroeder says in the press release that protecting senior investors is one of its core missions. The regulator has been aggressively pursuing brokers over unsuitable trades in elderly clients’ accounts.

Last month Finra barred a former Wells Fargo Advisors broker for churning $666,000 in a 93-year-old client’s account.

Finra

Finra and the SEC have also rolled out rules to require greater participation by financial advisors in precautions and activities aimed at protecting senior investors, as reported previously.

The regulators have proposed rules going into effect next February that would require advisors to have contact information for a trusted person on elderly clients’ accounts and allow broker-dealers to put temporary holds on suspicious disbursements.

Meanwhile, Washington lawmakers are pursuing the so-called Senior Safe Act, which would shield financial firms from legal liability over privacy concerns tied to reporting financial abuse of seniors. The House of Representatives has approved the measure this summer while the Senate reintroduced the bill in January.