FINRA Settlement: Two Florida Financial Advisors Barred for Churning the Account of an Elderly Investor

On October 21st, 2019, the Financial Industry Regulatory Authority (FINRA) announced a settlement with two former securities brokers (Disciplinary Proceeding No. 2016049321302). Ami Kathryn Forte (CRD No. 2457536) and Charles Joseph Lawrence (CRD No. 3131566) have both been barred from the securities industry for their role in churning the brokerage account of an impaired senior citizen investor.

Mr. Lawrence and Ms. Forte were both representatives for Morgan Stanley in Palm Harbor, Florida until 2016. In March of 2016, these two brokers were terminated by Morgan Stanley after allegations arose that they exploited one of the firm’s elderly customers.

The Findings: Exploitation of a Senior Citizen Investor 

According to the findings from FINRA, Ami K. Forte and Charles J. Lawrence took advantage of a high net worth Morgan Stanley customer who has a severe cognitive impairment. The investor—who was not identified in the official documents, but has been identified as a former corporate executive—was 79 years old at the time of the misconduct. FINRA notes that when working with these two brokers, this investor was no longer able to remember how many children he had (he stated he had five, when he only had three) and he struggled to tell the difference between a circle and a triangle.

After a comprehensive investigation, FINRA determined that Ms. Forte and Mr. Lawrence generated more than $9 million in commissions by churning the account of this investor. Essentially, they made an unreasonable amount frequent trades, moving in and out of securities—in the process generating huge fees for themselves and the firm, all while the elderly investor unknowingly suffered significant losses. Churning is, by definition, unsuitable trading. It is a serious violation of industry rules. 

Churning: A Quantitatively Unsuitable Investment Strategy   

The investigation conducted by the agency revealed that Ms. Forte and Mr. Lawrence executed more than 2,800 trades on behalf of the cognitively impaired investor within a 10-month period. Many of these quick, in-and-out trades involved long-term maturity bonds, and, thus, were not sensible regardless of the risk tolerance of the customer. Of course, for this elderly investor, this type of frequent trading strategy was especially ill-advised.

FINRA notes that the misconduct in this case involved quantitatively unsuitable investment strategies. In other words, the frequency of the trades combined with the high costs of the commissions and fees made it almost impossible for the elderly investor not to lose money. Indeed, he suffered huge losses over this relevant time period. Without admitting to denying wrongdoing, both Ami Forte and Charles Lawrence consented to FINRA’s findings and the sanctions—which include a permanent bar from the securities industry.

Speak to Our Miami Churning Lawyers Right Away

At ​Carlson & Associates, P.A., our Miami investment fraud lawyers have the skills and experience needed to handle the full range of unsuitable investment claims, including broker churning cases. For a confidential review of your investor losses case, please call us today. We represent investors in Miami, throughout South Florida, and beyond.

Resources:

finra.org/sites/default/files/fda_documents/2016049321302%20Ami%20Kathryn%20Forte%20CRD%202457536%20Order%20Accepting%20Offer%20of%20Settlement%20va.pdf

brokercheck.finra.org/individual/summary/2457536

brokercheck.finra.org/individual/summary/3131566

https://www.carlson-law.net/florida-broker-suspended-fined-for-mishandling-customer-information/