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Brokers accused of taking advantage of elderly client, barred by FINRA

| Oct 28, 2019 | FINRA, Firm News |

Brokers accused of taking advantage of elderly client, barred by FINRA

Two brokers accused of taking advantage of a 79-year-old client who doctors believe was suffering from Alzheimer’s disease are to be barred from the securities industry by the Financial Industry Regulatory Authority (FINRA).

FINRA says Ami Forte and Charles Lawrence exploited their customer by “engaging in quantitatively unsuitable trading” that generated “more than $9 million in commissions in less than one year.” According to FINRA disciplinary documents, Forte met the elderly man in the late 1990s and had a romantic relationship with him. Within the next decade, the man began to suffer from “severe cognitive impairment.” Forte reportedly never told her employer Morgan Stanley about her client’s ailing memory. Instead, FINRA says Forte worked with fellow broker Charles Lawrence and increased their level of trading using their client’s funds.

The Tampa Bay Business Journal identifies the client as Roy Speer, the founder of the Home Shopping Network.

From September 2011 to June 2012, Forte and Lawrence affected more than 2,800 trades in the Speer’s accounts. FINRA says many of the transactions involved included short-term trading of long-term investments, like bonds with long-term maturity dates.

Forte was able to control Speer’s funds after he opened six accounts worth approximately $192 million, all with Forte as the broker. She started The Forte Group at Morgan Stanley in 2001 reports FINRA, where she held the position of Senior Vice President. Lawrence joined the group and was tasked with day-to-day trades in Speer’s accounts.

FINRA says Forte became rich from the trades, receiving “substantial financial benefits” that were “unsuitable and excessive.” Forte and Lawrence generated more than $9 million in commission within 10 months.

The success of Speer’s accounts earned Forte the number one ranking in Barron’s Top 100 Women Financial Advisors list from 2010 to 2012, according to FINRA. Instead of receiving a commission, Lawrence was reportedly paid an annual salary ranging from $100,000 to $150,000. The agency says he also received an annual bonus ranging from $75,000 to $200,000.

Physicians said Speer suffered from dementia, Alzheimer’s or both illnesses as early as 2008. By fall 2011, Speer “…regularly exhibited signs of confusion and severe mental impairment, including failing to understand basic concepts involving money and his own net worth.”

Speer was hospitalized on June 20, 2012 and died on August 2012. Forte and Lawrence had no contact with Speer during this time FINRA says. Trading in Speer’s accounts continued until June 29, 2012, which amounted to more than $14 million transactions.

FINRA says Lawrence exploited “her personal and business relationships, and resulting position of trust and confidence” with the client. For their exploitation, FINRA recommends Forte and Lawrence be barred from any FINRA member firm, in any capacity.

Forte told the Tampa Bay Business Journal that admitted no wrong doing and agreed with FINRA to not seek employment in the brokerage industry. Forte has ongoing litigation with Morgan Stanley over her termination from the firm involving Speer’s accounts.

The Spencer Law Firm’s attorneys litigate FINRA related proceedings such as FINRA arbitration and enforcement actions.  If you have any questions regarding FINRA or if you have a FINRA arbitration or enforcement action and need assistance, please feel free to call Bonnie Spencer at the Spencer Law Firm at (888)237-459 to see what we can do for you. You can also visit us at Spencer-Law.com or at our office at 4635 Southwest Freeway, Suite 900, Houston, Texas, 77027.