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Regulation and Compliance > Federal Regulation > FINRA

FINRA Fines Ex-Broker for Trades in Deceased Client’s Account

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What You Need to Know

  • The individual placed 77 unauthorized trades involving $500,000 in securities, which led to losses of some $19,200, according to FINRA.
  • While still a broker, he also falsely claimed in a questionnaire that he hadn't serviced any accounts on a discretionary basis.
  • A firm terminated the broker's registration in 2019, and he is not associated with any FINRA member today.

The Financial Industry Regulatory Authority recently fined a former registered representative $7,500 because he allegedly continued to trade in a client’s account at the broker’s prior firm even after that client had died.

Without admitting or denying the findings of FINRA’s investigation, Ignacio Erhart Del Campo signed a FINRA letter of acceptance, waiver and consent March 18. In the letter, he consented to the imposition of FINRA’s sanctions, which included a suspension from associating with any FINRA member firms for two months and restitution of about $19,200 plus interest.

FINRA signed the letter Wednesday.

However, the individual is no longer registered as a broker, according to his report at FINRA’s BrokerCheck website. This means the suspension can only be enforced if he becomes registered once again; also, FINRA can’t force him to pay any fine or restitution unless he decides to become a registered rep again.

Erhart Del Campo first registered with FINRA in September 2013 as a general securities rep with Northeast Securities. On July 31, 2017, he became registered with Insigneo Securities after that firm acquired Northeast, according to the regulatory group.

On Sept. 26, 2019, Insigneo terminated Erhart Del Campo’s registration because he “failed to follow firm procedures with regards to placing trades in a client account,” according to a disclosure on his BrokerCheck report.

“Trades were marked solicited in a deceased client’s account for an extended period of time,” the disclosure went on to say.

From Sept. 27, 2019 until October 21, 2019, Erhart Del Campo was registered with FINRA as a rep for Epic Capital Securities. It was not immediately clear why he left Epic.

Erhart Del Campo could not be reached for comment on Monday, and there was no attorney representing him noted on the AWC letter. Insigneo and Epic did not immediately respond to requests for comment.

More Details of the Case

From Nov. 1, 2013 to June 4, 2017, while associated with Northeast Securities, Erhart Del Campo exercised discretion in a customer’s account without written authorization, according to FINRA.

After the client’s June 4, 2017 death and apparently unaware that the female customer died, Erhart Del Campo continued trading in the account for more than two years without authorization, according to the regulatory group.

The ex-broker believed his actions were in line with a trading strategy agreed to by the client prior to her death, FINRA said.

From June 9, 2017 to May 29, 2019, while associated with Northeast and Insigneo, he placed 77 unauthorized transactions in the account of the dead client.

This activity included the buying and selling of about $500,000 worth of securities, the regulator alleged. The trading occurred while the account was held at Northeast and after it was transferred to Insigneo.

The unauthorized transactions after the client’s death resulted in net losses of nearly $19,200 in the account, including the commissions on the trades, according to the regulator.

“From account opening in November 2013 to the customer’s death in June 2017, Erhart Del Campo traded in the customer’s account solely based on annual or semi-annual discussions with the customer regarding trading strategy,” FINRA alleged.

“The trades went beyond time and price discretion, and Erhart Del Campo never obtained written authorization from the customer or firm approval to trade in the account on a discretionary basis,” it explained.

Northeast Securities prohibited discretionary trading without written authorization from a client, according to FINRA.

On or around April 10, 2017, in connection with a branch office exam conducted by FINRA, Erhart Del Campo completed a questionnaire that asked whether he serviced any accounts on a discretionary basis and asked him to provide a list of such customers. Erhart Del Campo falsely replied, “None,” the regulator alleged.

As a result of Erhart Del Campo’s actions, he violated NASD Rule 2510(b) governing discretionary accounts and FINRA Rule 2010 governing standards of commercial honor and principles of trade, according to FINRA.