The Financial Industry Regulatory Authority has suspended a rep for three months and ordered him to pay $23,000 in fines and disgorgement for making 71 unauthorized trades in the account of an older customer with diminished capacity.
According to FINRA's order, between December 2017 and December 2019, while he was associated with Raymond James Financial Services, Jonathan Best also submitted two false compliance attestations to Raymond James.
In January 2018 and January 2019, Best falsely answered “no” when the firm asked if he had “any senior investors or other vulnerable adults for which [he was] concerned with their capacity to make sound decisions.”
Best’s attestations were false because he knew since at least October 2014 that the customer could not understand or authorize trades for her account due to her diminished capacity, the order states.
Best was suspended for three months, fined $12,500 and ordered to pay disgorgement of $10,760.88 plus prejudgment interest.
Order Details
At all relevant times, the customer was a widow with a net worth exceeding $16 million, the order states.
Best met the customer in 1985, when she was 56 years old. Between 1985 and 2001, Best serviced the customer's trust account at a bank that was not registered with FINRA. In January 2001, when Best became associated with Raymond James, the customer transferred her trust account to Raymond James with Best as the registered representative of record.
In March 2005, the customer opened a second account at Raymond James with Best as the representative of record, the order states.
The new account documents for the primary account "stated that the customer's annual income was between $500,001 and $1,000,000, and also stated that her net worth was over $5,000,000. The new account documents further stated that Customer A’s primary investment objective was 'income' and her risk tolerance was 'high.'”
The customer was the only person authorized to transact in the primary account, and the account was non-discretionary. Raymond James prohibited discretionary trading in retail brokerage accounts, including the customer's primary account, according to FINRA.
From 2005 until 2014, the funds in Customer A’s primary account were invested in municipal bonds and various bond funds. As bonds matured or were redeemed, the funds in the account were reinvested in additional bonds. During this time period, Customer A understood and authorized these investments after discussing them with Best.
On Feb. 15, 2013, when the customer was 84 years old, she executed estate planning documents.
One of the estate planning documents provided that Best and the customer's accountant would be granted co-power of attorney in the event that two physicians provided written statements, under oath, that they deemed the customer to be incapacitated.
Raymond James prohibited representatives from serving as power of attorney for customers unless, in exceptional cases, approval was granted by the representative’s supervisor and the firm’s central compliance department, the order states.
Beginning in 2014, Best became aware that the customer was exhibiting signs of diminished capacity, including that she was diagnosed with early Alzheimer’s disease and was moving to a full-time, residential memory care facility. Best did not inform Raymond James of any of these facts.
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