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September 08, 2023 at 02:39 PM
What You Need to Know
- An ex-Schwab broker improperly used clients' Social Security funds, FINRA said.
- The firm terminated him after learning of his actions.
- Not cooperating with a FINRA request for information is a surefire way to be barred from the industry.
A former Charles Schwab broker has been barred by the Financial Industry Regulatory Authority from associating with any FINRA member firms after he improperly used clients’ Social Security funds for his own benefit and then refused to provide information requested by the regulator while it was investigating him, according to FINRA.
Not cooperating with a FINRA request for information results in a bar from the industry under Rule 8210.
Between June and September 2022, while associated with Schwab, Ethan Christopher Martin “converted and improperly used funds from a married couple who held a joint brokerage account at the firm, one of whom was a senior” client, according to a FINRA letter of acceptance, waiver and consent.
When the clients asked Martin for their account information to initiate direct deposits for their Social Security checks, Martin provided them with the number for his personal Schwab account rather than the clients’ account number. He then allegedly received three electronic deposits of the clients’ Social Security payments, totaling $6,981, which he “retained and used for personal investments and expenditures,” according to FINRA.
Without admitting or denying the regulator’s findings, Martin signed the letter on Aug. 29, consenting to the FINRA bar. In return, FINRA agreed to not bring any future actions against Martin based on the factual findings described in the letter.
Jasmine L. Abraham, counsel for FINRA Department of Enforcement in Rockville, Maryland, signed the letter Tuesday.
“We are disappointed in the conduct of this former representative who did not adhere to the high ethical standards that we expect of our employees,” a Schwab spokesperson told ThinkAdvisor on Friday. “Once we discovered his actions, we terminated his employment, escalated the matter to FINRA, and made the clients whole.”
