Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Regulation and Compliance > Federal Regulation > FINRA

Ex-Cetera Rep’s Suspension Is Reminder: Brokers Work for Clients, Not In-Laws

Your article was successfully shared with the contacts you provided.

The Financial Industry Regulatory Authority suspended an ex-Cetera broker from association with any FINRA member in any capacity for four months for making transactions in a client’s accounts based on instructions given to him by the customer’s son-in-law, according to FINRA.

Without admitting or denying the findings, Robert Silverman signed a letter of acceptance, waiver and consent May 15 in which he agreed to the suspension and to pay a $10,000 fine. FINRA accepted the letter Wednesday.

Cetera and Fawn Lee, an attorney at the New York law firm Ellenoff Grossman & Schole, who represented Silverman, did not immediately respond to requests for comment Friday.

Silverman was associated with Cetera Financial Specialists from June 2004 until July 2019, according to the FINRA letter. On July 2, 2019, the firm filed a Form 5 Termination Notice disclosing it discharged Silverman that day because he “violated the firm’s policy by accepting account instructions, including withdrawal requests, from a non-client individual without written authority from the client.”

The termination was included as a disclosure on Silverman’s profile at FINRA’s BrokerCheck website. In a separate disclosure, he was the subject of a customer dispute Sept. 24, 2019, by the same client in which the customer alleged Silverman “failed to perform his fiduciary duty by accepting withdrawal paperwork from her son-in-law, purportedly with her signature and on her behalf for deposit to a bank account in her name, which she had not signed.” The client requested damages of $229,669.87. It is still pending and Silverman is no longer registered as a broker or RIA, according to BrokerCheck.

During the relevant period, Silverman “effectuated withdrawals from the customer’s accounts at the son-in-law’s instruction without receiving customer authorization,” according to the FINRA AWC letter. Silverman also “facilitated the son-in-law’s own direct withdrawals from the customer’s accounts by providing to the son-in-law the withdrawal request form,” it said, adding: “Each withdrawal request caused sales of securities in the customer’s accounts in order to fund the withdrawal.” In all, Silverman “effectuated or facilitated 18 unauthorized withdrawal requests totaling $228,679,” according to FINRA.

By virtue of that misconduct, Silverman violated FINRA Rule 2010 (governing standards of commercial honor and principles of trade), FINRA claimed.

In addition, during the same relevant period, Silverman used an email account that was not disclosed to or approved by Cetera to communicate with the son-in-law regarding the client, which included the son-in-law’s instructions to Silverman to withdraw funds from the customer’s accounts, according to FINRA.

Cetera was unaware of the unauthorized electronic communications used by Silverman for the customer’s account and, therefore, did not retain those communications, the regulator said. By virtue of that conduct, Silverman violated FINRA Rules 4511 (governing general requirements for books and records) and 2010, FINRA alleged.

— Related on ThinkAdvisor:


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.