The Financial Industry Regulatory Authority barred a New York-based broker for churning the account of a blind elderly widow and recommending unsuitable investments.
Hank Mark Werner of Northport, New York was also ordered to pay more than $155,000 in restitution to the widow and penalized $80,000.
Werner “plundered” his customer’s account with high-frequency trading and high commissions, FINRA said.
He often bought and sold the same securities within a week or two, and charged exorbitant commissions, according to FINRA’s findings.
It was “impossible for [the customer] to make money,” FINRA said.
Her husband died in 2012. “She was 77 and in ill health when Werner began churning her accounts,” FINRA said.
He should have invested the blind widow’s money in “minimum risk” products. Instead Werner made more than 700 trades from October 2012 to December 2015, generating about $210,000 in commissions.
The blind widow lost more than $175,000 as a result of his “reckless trading,” FINRA said.
“Werner’s sole motivation was to use [the customer’s] accounts to generate commissions to cover his financial liabilities, not make money for his client,” FINRA said.
FINRA also ordered Werner to disgorge $10,000 in commissions he made for recommending an unsuitable variable annuity, FINRA said.
A FINRA hearing panel concluded that “Werner engaged in egregious misconduct and is unfit to work in the securities industry.”
FINRA is the Financial Industry Regulatory Authority, a private corporation. It acts as Wall Street’s independent regulator and is overseen by the SEC.
Werner worked for Legend Securities, Inc. in New York City. FINRA fined the firm $200,000 for failing to supervise Werner.
Legend didn’t respond to FINRA’s complaint and was held in default.
“Legend voluntarily paid $20,000 in partial restitution to the customer,” FINRA said.
FINRA said its hearing panel’s decision becomes final after 45 days unless it’s appealed.
Richard L. Cassin is the publisher and editor of the FCPA Blog.