A December 20th FINRA regulatory decision charged previously registered brokers Ami Forte (CRD#: 2457536) and Charles Joseph Lawrence (CRD#: 3131566) for violating NASD and FINRA rules and the Securities Exchange Act of 1934. Forte and Lawrence exploited a 79-year-old client suffering from severe cognitive impairment.
Between September 2011 and June 2012, the customer, RS, suffered a severe mental decline. During this time, Forte and Lawrence made more than 2,800 unauthorized trades in his accounts, generating more than $9 million dollars in commissions. Both brokers were with Morgan Stanley at the time.
RS had been a customer of Forte’s since the late 1990’s when they had been in a romantic relationship. She remained in a position of trust and confidence with RS and used this to her advantage until his death in mid-2012.
Forte and Lawrence met often with RS during his year of decline. Both were well aware of his diminished mental state and continued to exploit RS. Instead of reporting RS’s declining mental state to Morgan Stanley as required, the pair increased trading in RS’s accounts. This continued even when RS was in the hospital and unable to communicate.
FINRA has found Lawrence and Forte committed numerous infractions including:
- Excessive trading and churning,
- Forte of aiding and abetting Lawrence’s violations,
- Engaging in unsuitable short-term trading of long-term investment products,
- Exercising discretion in RS accounts without written authorization.
These infractions resulted in over twenty industry rule violations. The FINRA hearing charges the respondents for willful violation of NASD, FINRA and MSRB rules, and provisions of the Securities Exchange Act of 1934.
FINRA recommends monetary sanctions, repayment of ill-gotten gains, full and complete restitution plus interest and hearing costs.
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