When two sisters inherited $90,000 from their deceased aunt's estate, they trusted their aunt's broker, by signing checks over to an entity under his sole control.
Such blind faith (account documentation was not requested for a year!) turned out to be misplaced, and almost cost them their windfall, which was seriously misappropriated, according to the Financial Industry Regulatory Authority, the largest regulator of securities firms in the U.S.
The reported freeloader: Richard L. Wood, a Miamisburg, Ohio-based broker, then with American General Securities, Inc., is now barred from the securities industry.
"Preying upon these two sisters by stealing from their accounts and then doctoring documentation with the intent to mislead them is an egregious breach of ethical standards," said Susan Merrill, the Executive Vice President and Chief of Enforcement of FINRA, in a statement.
How It All Began
The deception began in August 2006 after Wood's client passed away and he was liquidating her estate. Wood recommended that the sisters open brokerage accounts with him so they could invest in bonds.
The sisters then signed over checks to STL Financial, Inc., which Wood controlled, not a bona fide brokerage firm. A year later, one of the sisters worried that she had seen no account or investment documentation, and after repeated requests she was sent what later turned out to be falsified statements from Wood.