FINRA Bars Ami Forte and Charles Lawrence for Their Roles in Churning Accounts of Elderly Client with Dementia
Forte and Lawrence Exploited Elderly Client to Generate More Than $9 Million in Commissions in Less Than One Year
WASHINGTON—FINRA today announced it has barred Ami Forte and Charles Lawrence of Florida for their respective roles in churning accounts belonging to a 79-year-old customer who suffered from severe cognitive impairment.
Forte first met the customer (identified as “RS” in the settlement) in the late 1990s, at which time the two developed a romantic and business relationship. Forte, who maintained near daily contact with RS, used her position of trust and confidence to exploit RS and generate excessive commissions from his accounts.
FINRA found that from September 2011 through June 2012, the Forte Group, an entity Forte established in 2001, which Lawrence joined at its inception, effected more than 2,800 trades in RS’s accounts, generating approximately $9 million in commissions. Over half of these transactions involved short-term trading in long-maturity bonds, including municipal bonds, intended for customers with long-term investment horizons.
This unsuitable and excessive trading continued until shortly before RS’s death. On June 20, 2012, RS entered the hospital for the final time before his passing in August 2012. Despite being hospitalized and not in contact with anyone from the Forte Group, between June 20, 2012 and June 29, 2012, RS’s accounts had over $14 million in transactions.
Jessica Hopper, Senior Vice President and Acting Head of FINRA’s Department of Enforcement, said, “Protection of senior and vulnerable investors is a top priority for FINRA. Churning the account of an elderly customer who suffered from severe cognitive impairment is an egregious violation of the high ethical standards to which FINRA holds all associated persons.”
FINRA rules provide member firms with ways to respond to situations in which they have a reasonable basis to believe that financial exploitation has occurred, is occurring, has been attempted or will be attempted. FINRA recently announced it is conducting a retrospective review to assess the effectiveness and efficiency of its rules and administrative processes that help protect senior investors from financial exploitation. Also, FINRA’s examinations of member firms focus on a broad range of topics relating to the protection of senior investors and FINRA’s Securities Helpline for Seniors® has highlighted issues relating to financial exploitation. Additionally, the FINRA Investor Education Foundation plays a central role in FINRA's senior investor education and outreach efforts.
In settling this matter, Forte and Lawrence neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry – brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.