Imagine a blind, 82-year-old woman who is wheelchair-bound. Then, her husband dies, and she has to manage her investment accounts by herself. Clearly, this woman is susceptible to financial fraud. Now, imagine what would happen when an unscrupulous stockbroker could do whatever he wants with her money.
In a recent investment fraud case, this is exactly what happened.
A Clear Case of Investment Fraud
A FINRA arbitration panel recently levied harsh punishments against Long Island stockbroker Henry Mark Werner. According to the panel, Werner ruthlessly churned the accounts of an 82-year-old, blind, wheelchair-bound and newly-widowed client.
Werner made over 700 trades in the disabled widow’s accounts, earning $210,000 in fraudulent commissions over a three-year period. The transactions began in 2012, after the death of the woman’s husband. On top of churning her accounts, the corrupt stockbroker lost over $175,000 of her retirement savings.
After Fighting Back, Justice Has Been Served
After years of relying solely on her stockbroker – who maintained complete control over her accounts – the woman discovered the truth. With the aid of a FINRA arbitration attorney, she filed suit and won her case in November 2017.
The arbitration panel ordered Werner to pay his victim approximately $155,000 in restitution and $10,000 in commissions related to the sale of an unsuitable annuity product. The panel also fined Werner $80,000.
FINRA Arbitrators Harshly Censured Bad Broker
Clearly, the woman required a conservative investment strategy to supplement to her social security income. The fact she was disabled means Werner owed her a high level of responsibility and care. Also, because Werner had the authority to buy and sell investments without consulting his client, he owed her an even higher legal obligation. However, instead of fulfilling his legal obligations, Werner pillaged the account for his own profit and gain, causing massive financial damages.
Also, the FINRA arbitration panel stated that Werner carried out “such an active trading strategy that, when the high commissions he charged were taken into account, it was impossible for [the customer] to make money.” The panel further stated that “Werner took advantage of [the customer’s] vulnerability after her husband died in September 2012. 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.”
Barred from the Industry
Hank Mark Werner will not have the opportunity to defraud a vulnerable investor again. The FINRA panel permanently barred him from working as an investment advisor, stating that “Werner engaged in egregious misconduct and is unfit to work in the securities industry.” FINRA also censured and fined the brokerage firm that employed Werner. Legend Securities Inc. will pay $200,000 in fines relating to the incident.
There are numerous ways that stockbrokers and investment advisors defraud their customers. Even the savviest and experienced investors can fall into an investment trap.
Fortunately, you can fight back. If you have any suspicion that your accounts have suffered from mismanagement – or if you suspect that an advisor is taking advantage of you – contact The Michael Brady Lynch Firm. We will confidentially answer your questions and advise you of your legal rights and options.