{"id":1910,"date":"2013-11-13T06:39:06","date_gmt":"2013-11-13T14:39:06","guid":{"rendered":"http:\/\/staging-prblog.paladinregistry.com\/blog\/?p=1910"},"modified":"2014-01-07T16:32:46","modified_gmt":"2014-01-08T00:32:46","slug":"investor-protection-from-unauthorized-withdrawals-from-accounts","status":"publish","type":"post","link":"https:\/\/www.paladinregistry.com\/blog\/wall-street\/investor-protection-from-unauthorized-withdrawals-from-accounts\/","title":{"rendered":"Investor Protection from Unauthorized Withdrawals from Accounts"},"content":{"rendered":"

\"investor<\/a>It\u2019s a Brokerage Firm\u2019s Duty to Protect Client Accounts from Unauthorized Withdrawals!\u00a0 What are Unauthorized Withdrawals?\u00a0 <\/strong> <\/strong><\/p>\n

FINRA has warned member firms to protect investors against unauthorized withdrawals from their accounts, including unauthorized withdrawals by spouses<\/em><\/strong>, children<\/em><\/strong>, or care-giving relatives<\/em><\/strong>.\u00a0 This article discusses some of the violations. These violations entitle an investor to legal and equitable relief by State and Federal law.<\/p>\n

Failure to Supervise<\/strong><\/p>\n

FINRA requires that each member firm establish and maintain a system to supervise the activities of each registered representative, registered principal, and other associated person <\/a>to achieve compliance with applicable securities laws and regulations.\u00a0 These rules are intended to protect all investors from–among other risks\u2014the risk of theft of their savings\u2014including by family members.<\/p>\n

By failing to implement a system to properly verify that withdrawal instructions are genuine, a member firm is in violation.<\/p>\n

Federal courts declare a broker must supervise discretionary transactions on a daily basis as well as monthly reviews.\u00a0\u00a0 Federal courts have declared that the fact that a potential wrongdoer is related by blood or marriage to the account holder is irrelevant\u2014the client must be protected against all potential wrongdoers. <\/strong><\/p>\n

Failure to Provide Account Statements<\/strong><\/p>\n

The New York Stock Exchange requires member firms to properly provide account statements to customers at the customer\u2019s address.\u00a0 For example, a member firm directly violates this rule by allowing account statements to be sent to a customer\u2019s relative and not to a customer\u2019s address.<\/p>\n

Failure of Due Diligence, Supervision, and Good Business Practices<\/strong><\/p>\n

The New York Stock Exchange requires member firms to \u201cengage in good business practices.\u201d In addition, the New York Stock Exchange requires member firms to use due diligence to learn the essential facts relative to every customer, every order, every cash or margin account accepted or carried by such organization.\u00a0 The New York Stock Exchange also requires every member firm to supervise diligently all accounts handled by registered representatives of the organization.<\/p>\n

Violation of Anti-Money Laundering Rules<\/strong><\/p>\n

FINRA requires member firms to establish and implement Anti-Money Laundering (\u201cAML\u201d) policies and procedures designed to monitor, analyze, and investigate suspicious transactions; i.e., unauthorized withdrawals from an IRA account by a non-customer.<\/p>\n

Failure to Conduct Honest and Fair Dealings<\/strong><\/p>\n

FINRA requires every member<\/a>, in the conduct of its business, to observe high standards of commercial honor and just and equitable principles of trade.\u00a0\u00a0 Due diligence needs to be in place to verify withdrawal instructions delivered to it are by an authorized person, and verification that instructions were legitimate.<\/p>\n

Failure to Protect Senior Investors against Abuse by Family Members<\/strong><\/p>\n

FINRA provided member firms with specific \u201cred flags\u201d of which it should note to fulfill its duties to customers to avoid financial abuse by family members. FINRA provided the following specific \u201cred flags\u201d.<\/p>\n

1. Sudden, atypical or unexplained withdrawals;<\/p>\n

2. drastic shifts in investment style;<\/p>\n

3. inability to contact the senior customer;<\/p>\n

4. signs of intimidation or reluctance to speak in the presence of a caregiver;<\/p>\n

5. isolation from friends and family.<\/p>\n

The whole point of a client’s establishing a discretionary account is to turn over to the investment firm management and investment responsibilities <\/a>that the client either does not want to have or feels inadequate to handle.<\/p>\n

To learn more about James Dunlap, visit him at<\/em> www.jamesdunlaplaw.com<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s a Brokerage Firm\u2019s Duty to Protect Client Accounts from Unauthorized Withdrawals!\u00a0 What are Unauthorized Withdrawals?\u00a0 FINRA has warned member firms to protect investors against unauthorized withdrawals from their accounts, including unauthorized withdrawals by spouses, children, or care-giving relatives.\u00a0 This article discusses some of the violations. These violations entitle an investor to legal and equitable relief by State and Federal law. Failure to Supervise FINRA requires that each member firm<\/p>\n","protected":false},"author":24,"featured_media":1918,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-1910","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-wall-street"],"yoast_head":"\nInvestor Protection from Unauthorized Withdrawals from Accounts<\/title>\n<meta name=\"description\" content=\"It\u2019s a Brokerage Firm\u2019s Duty to Protect Investor Accounts from Unauthorized Withdrawals!\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.paladinregistry.com\/blog\/wall-street\/investor-protection-from-unauthorized-withdrawals-from-accounts\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" 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