Finra Raps Ex-Morgan Stanley Broker Who Said Deceased Client Had Authorized Distributions

Taken from: Source

By: AdvisorHub Staff


The Financial Industry Regulatory Authority showed little sympathy for a 36-year industry veteran in Michigan who it alleged falsely identified a deceased customer as having authorized disbursements from a trust.

The regulator issued a $7,500 fine and two-month suspension against Paul C. DeMark, a former Morgan Stanley broker who is now with Ameriprise Financial Services in Clinton Township, Michigan, according to a letter of settlement finalized on Tuesday.

From January 2013 to July 2017, DeMark submitted or “caused to be submitted” 48 disbursement forms that named the deceased trustee or his son, who had a similar name, as having authorized the withdrawal, Finra said. In fact, the disbursements were authorized by a separate individual, the successor trustee, according to the regulator.

The violations appeared to be procedural, and Finra did not allege any customer harm had occurred. It said the actions violated its rules requiring firms and brokers to maintain accurate books and records and thus also crossed its catch-all Rule 2010 requiring “high standards.”

DeMark’s lawyer, John A. Hubbard in Plymouth, Michigan, did not immediately return a request for comment. DeMark also did not immediately return a request for comment sent through social media.

The broker had spent his entire career at Morgan Stanley in Birmingham, Michigan prior to the dust-up over authorizations. Morgan Stanley allowed him to resign in March 2019 for “allegations regarding compliance with proper procedures related to a deceased client’s account.”

Morgan Stanley also said that it had concerns with respect to a separate client account about the liquidation of a money market fund and transfer of funds to the client “without receiving reconfirmation immediately beforehand.”

The U5 filing prompted the Finra action, according to the settlement letter.

DeMark’s BrokerCheck report shows no evidence of any client complaints tied to the issue Finra raised in Tuesday’s letter. He has one customer dispute from 2010 related to the 2008 financial crisis in which a client had sought $800,000 in damages over allegedly unsuitable investments. The firm paid the customer $118,750 to settle in that case. DeMark did not contribute to the payment.