FINRA has barred two brokers from selling securities as the result of what it termed “wrongfully converting” approximately $300,000 from an elderly widow that the agency stated exhibited “diminished mental capacity.” The brokers, Fernando L. Arevalo and Jimmy E. Caballero, were also cited for failing to fully cooperate with the FINRA investigation.
Though both men were employed with JPMorgan Chase Securities LLC at the time of the wrongdoing, the firm was not a party to the FINRA action. However, JPMorgan did make restitution to the client, according to FINRA.
As detailed by the regulatory agency in a statement, the elderly customer maintained accounts at JPMorgan and an unspecified related bank affiliate. Between April and July of this year, the client deposited about $300,000 from the sale of two annuities into a bank account Arevalo had opened for her. (FINRA does not specify the type of annuity at issue, but both brokers had a Series 6 license, which permitted them to sell investment products such as mutual funds, variable annuities and other premium-funded variable insurance contracts.)
Funds were subsequently withdrawn from the account via two cashiers checks. On that same day, Caballero deposited the money into a joint account he opened in his name and the customer’s name at a different bank. When the bank questioned the deposits and requested further confirmation before completing the transaction, Arevalo then drove the client to the bank to confirm the source of funds.
According to FINRA, the money in the account was depleted through numerous checks made payable to Arevalo. Both Caballero and Arevalo used the account’s debit card for personal expenses including payments on a real estate loan, car loan and various retail purchases.
FINRA’s summary of the action noted that although the customer was aware that Caballero had opened the bank account on her behalf, she believed that she was the sole holder of the account and that it was not a joint account. She also was unaware of any withdrawals from the account and did not authorize any withdrawals for the brokers’ personal use.
Caballero and Arevalo neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.