OK, so it’s been a while.  What with Thanksgiving, Hannukah, Christmas, New Years and a family trip, I wasn’t that focused on sharing my thoughts with the world.  But today something struck me.  On Wall Street reported that a broker in Washington state was sentenced to 51 months for embezzlement.  How he did it was interesting to me.

First, he was barred from the securities industry and fired by LPL.  Then he convinced his clients (the article was silent on how) to move their accounts to TD Ameritrade.  He then kept their usernames and passwords so he had access to the accounts at any time.  Then, when TD Ameritrade got wind of a potential problem, they barred him from doing business with them.  For some of the victims, this flag wasn’t red enough.  They believed him when he told them that TDA was trying to force him to join their firm.  So the true believers moved their accounts to Etrade where the thievery continued.

This guy had a record.  It could be found on Brokercheck.  But it appeared that the victims didn’t look or didn’t care.  FINRA and the regulators have focused large amounts of time and energy on making sure that Brokercheck is accurate and extensive.  But do people use it?  I think a very small percentage.  I would be surprised if it’s more than single digits percentage-wise.  Instead, it is used by recruiters, lawyers and others in industry (including brokers competing for an account).  The Brokercheck system has been around in one for or another for 25 years (it used to be hard copy).  How much fraud and theft has this really stopped?  I’ll bet it costs more to run the system than the sum of the avoided losses.

So now that he’s been sentenced, he’s truly sorry.  Sorry that he caused pain or sorry that he got caught?

On a small world note, I know the judge.  Judge James Robart was a securities lawyer in Seattle back in the day.  He was a smart guy and a good person.  He said, “This is a crime of greed — pure unadulterated greed — plain and simple.”  He’s right.  Unfortunately, I think that some of the victims of this theft will have difficulties that will last far beyond the 51 months this guy is in jail.

 

That’s the first view of 2015 by one lawyer from Jupiter, Palm Beach County, Florida.  I’m Marc Dobin.