A Wells Fargo financial advisor siphoned off more than $2.7 million from a 77 year-old woman in NJ. He spent the funds on a 5 bedroom home, gambling sprees, gold coins, and various luxury items.  The victim is obviously traumatized by losing her life’s savings and the lawsuits required to seek compensation.  As if that weren’t bad enough, she filed a lawsuit to take possession of the home that was purchased with her retirement savings, but the judge refused to evict the criminal financial advisor.

Is this uncommon?  NOPE…

Over 15% of UBS advisors and over 15% of Wells Fargo advisors were disciplined for misconduct.  This figure is staggering.  Taking this one step further, what’s to stop any advisor from taking as much as they can get away with (without getting arrested)?

Financial advisors have been known to transfer assets to other accounts through fraudulent wire transfers to their accounts or credit card companies to pay off their personal debts. The advisors then sends forged account statements to their clients that reflect fictitious positions and money balances.

They may invest a client’s assets into a fictitious company that purport to invest in private credit funds, venture funds, or real estate syndicates.  Often these companies are simply shell companies that represent Ponzi schemes or simply outright theft.

Do you think your brokerage will automatically reimburse you for this theft?  Think again.  They will not.  They have teams of lawyers to bury you in legal fees as you desperately try to get reimbursed.  According to this article entitled “Do you Dare Sue Your Broker,” it will be an uphill battle:

In many or most cases, the broker will deny absolutely everything with arguments that will make your own blood either boil or freeze. The defenses will range from blaming you, the market or both, to distorting the figures or the laws, the logic or anything else that shifts the liability for the losses away from the broker.

Even amongst those advisors who have a CFP (certified financial planner) designation are risky to your financial health: The Wall Street Journal revealed that more than 6,300 CFP certificants—out of approximately 72,000—were shown as having clean records on the CFP Board’s search website BUT, in fact, had regulatory disclosures. Those disclosures included more than 5,000 who had received customer complaints, and 499 who had past or current criminal charges.

— AK