FINRA Fined Fidelity More than $1 Million for Failing to Protect Older Investors
Securities industry watchdog, the Financial Industry Regulatory Authority (FINRA) has announced that it has fined Fidelity $500,000 and demanded the brokerage pay restitution of $530,000 to nine Fidelity clients - eight of whom were senior investors - who were scammed by a fake broker.
According to FINRA, Lisa Lewis posed as a Fidelity broker in order to obtain their financial information, which she used to systematically steal customer assets for her own enrichment. Lewis fraud began in 2006 and continued through 2013 when she was caught; she has been sentenced to 15 years in prison and must repay more than $2 million to the aggrieved investors.
Fidelity Allegedly Failed to Adequately Detect
FINRA’s investigation into the fraud revealed that Fidelity had failed to adequately detect and protect clients who had opened up accounts at Fidelity - sometimes jointly with Lewis - in spite of multiple “red flags” connected to Lewis’ scam.
The red flags included but were not limited to shared customer information in spite of the fact that none of the investors were related; patterns of money movement; and customer service calls that should have indicated something was not right in Lewis’ managing of these accounts.
Broker-Dealer Must Protect Investors - Especially Seniors
FINRA fined Fidelity largely because of failed policies and procedures required to be in place to detect such red flags and particularly to act swiftly upon them before investors can be financially injured.
FINRA’s fine and demand for restitution, along with Lewis’ long prison sentence, sends a strong message that such failures by broker-dealers will not be tolerated. In today’s political climate where protecting seniors has become paramount, we expect to see more and more of such regulatory actions.
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