FINRA barred registered principal Paul David Arnold for the alleged misappropriation of $242,000 from an elderly customer's brokerage account to a bank account. Though the OHO did not order restitution because the elderly customer obtained damages through arbitration, FINRA did note that Arnold failed to pay the award and was previously suspended from the industry for failure to pay.
According to the default decision issued after Arnold failed to respond to repeated requests for information, the former Raymond James & Associates, Inc. representative transferred $242,000 from the brokerage account of an 88-year-old widower to a bank account in that customer's name, with the elderly client authorizing and trusting Arnold to manage the funds and pay bills.
Thanks to this trust-based authorization, Arnold gained permission to draft and execute checks on the elderly widower's behalf, which FINRA claims he did by having the customer sign blank checks before Arnold filled in the name of the payee and the amount on each check.
The findings state that the customer thought these blank checks were being used to pay his bills, while FINRA maintains the 13 checks were instead made payable to Arnold's wife and son in violation of FINRA rules and without the elderly customer's authorization or consent.
Raymond James fired Arnold in 2011 for "failure to cooperate with [the] Firm's internal review" process while FINRA suspended and ultimately barred Arnold for the conversion or improper use and misappropriation of customer funds and failure to appear for on-the-record testimony. Consider for a moment that the disclosure Raymond James publicly provided makes no reference to any theft, conversion of funds, or anything specific about the conversion of funds. Wall Street loves to hide the truth about the salespeople who go astray, since a reporting of the truth would cause prospective customers to question the lousy supervision exercised by many FINRA member firms.
As exemplified in this case, FINRA-registered brokerage firms are often reluctant to make right with their customers, even if the broker stole a client's money. In this case, the customer was forced into an adversarial process in order to simply recover what was his. Lax enforcement by regulators and disinterest by law enforcement in these types of theft cases mean many defrauded customers allow themselves to believe that they must be somehow at fault. Complaints to the brokerage firms are often stonewalled by a "we did nothing wrong" form letter. Generally, a brokerage firm is held to be the principal of the broker and responsible for the broker's conduct. Our firm has represented clients in similar theft claims brought against both the largest and smallest brokerage firms in the country. Our experience is that more often than not, any firm's first defense is "deny, deny, deny." The second defense is to blame the victim for the theft; the "he should not have entrusted the money to us" defense. The third defense is to blame the broker arguing that the theft took place outside of the supervision of the firm. It takes a detailed knowledge of the FINRA rules, applicable state and federal securities laws, and tort law to take on Wall Street and its protective minions, refute these morally bankrupt but persuasive defenses, and force a brokerage firm to make right.
If you have invested with Paul David Arnold, Raymond James or with any other broker of firm whose dishonesty in the conversion, misappropriation or improper use of funds or accounts has proven harmful to your investments or interests, please call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.