FINRA securities brokerage firms such as Interactive Brokers have various duties under FINRA Rules and federal law to safeguard customer assets and guard against money laundering.

The U.S. Bank Secrecy Act (BSA) is set out in 31 U.S.C. Sec. 5311 – 5330. Securities Broker-Dealers such as IB are defined as a “financial institution” under the BSA. 31 U.S.C. Sec. 5312(a)(2).  “Money Laundering” is defined in 31 U.S.C. Sec. 5340 as “the movement of illicit cash or cash equivalent proceeds into, out of, or through the United States, or into, out of, or through United States financial institutions…”
The fraudulent theft of customer monies through unauthorized withdrawals/transfers by ACH or wire meets the definition of “money laundering” because it involves the movement of illicit cash through and out of United States financial institutions.
The Bank Secrecy Act requires financial institutions such as IB to develop and institute internal policies, procedures, and controls to “guard against” money laundering. Specifically, 31 U.S.C. Sec. 5318(h) requires:

“(h) Anti-Money Laundering Programs.—
(1) In general.—In order to guard against money laundering through financial institutions, each financial institution shall establish anti-money laundering programs, including, at a minimum—
(A) the development of internal policies, procedures, and controls;
(B) the designation of a compliance officer;
(C) an ongoing employee training program; and
(D) an independent audit function to test programs.”

FINRA Rules require IB and other member securities firms to comply with the BSA and associated regulations, and implement appropriate policies and procedures. Specifically, FINRA Rule 3310 states: “Each member shall develop and implement a written anti-money laundering program reasonably designed to achieve and monitor the member’s compliance with the requirements of the Bank Secrecy Act (31 U.S.C. 5311, et seq.), and the implementing regulations promulgated thereunder by the Department of the Treasury.” FINRA Notice to Members 02-21 also advised broker-dealers “to look for signs of suspicious activity that suggest money laundering” – or, “red flags” – and if they detect “red flags,” to “perform additional due diligence.”

Interactive Brokers was censured and fined $15,000,000.00 by FINRA in 2020 in a letter of Acceptance, Waiver, and Consent (AWC) for “deficient” Anti-Money Laundering procedures and procedures/supervision relating to money transfers. IB’s documented failures therein included the same situation as the arbitration above – “[IB] did not reasonably surveil for AML purposes outgoing wire transfers identified as “first-party” transfers (i.e., transfers where the recipient was the customer itself), because the Firm accepted customers’ designations that they were first-party wire transfers, even when the Firm learned that some purportedly “first-party” wires were, in fact, third-party wires.”

Greco & Greco has been representing harmed investors against their securities brokerage firms for over twenty-five years. If your investment firm has transferred monies from your account to criminals or scammers without your knowledge or consent, please contact Virginia Securities Fraud Lawyer Scott Greco for a free consultation about your potential case.

According to FINRA’s Brokercheck report, Mr. Trimber was terminated by Wells Fargo in February 2024 for the following reason: “Financial Advisor discharged after he admitted during review to making unauthorized transfers of client funds to recipients outside of the Firm.”

Financial Advisors occupy positions of trust and access to accounts that unfortunately can result in the theft of customer funds. In such situations, the brokerage firms for which the advisor is registered also bear responsibility for their advisors’ criminal actions, and also can be found liable for failures to supervise the wrongful activity.

The Virginia Securities Fraud Lawyers of Greco & Greco have been representing the interests of wronged customers in Virginia and across the country for over thirty years. These cases, many of which end up in FINRA arbitration, have often involved the fraudulent theft of funds by trusted financial advisors and brokers. If you believe you may have been victimized by your advisor, please contact Scott Greco for a free attorney consultation about your case.

FINRA states “Pursuant to FINRA Rule 9552(h) and in accordance with FINRA’s Notice of Suspension and Suspension from Association letters dated June 2, 2023, and June 26, 2023, respectively, on September 5, 2023, Wilhelm is barred from association with any FINRA member firm in all capacities. Wilhelm failed to request termination of his suspension within three months of the date of the Notice of Suspension; therefore he is automatically barred from association with any FINRA member in all capacities.”

The Virginia-based securities fraud lawyers at Greco & Greco have been representing wronged customers of financial advisors for decades, including many clients from southwest Virginia including Roanoke. We have extensive experience for cases of securities fraud, breach of fiduciary duty, churning, broker theft, false statements, unsuitable recommendations, and unauthorized trading. If you believe you may have been victimized by your investment advisor, please contact Scott Greco for a free attorney consultation.

As shown by Mr. Starke’s FINRA Brokercheck report, found here, in the last two years customers have filed seven complaints against Mr. Starke, most involving allegations of the sale of illiquid, unsuitable, and high-risk investments.

Alternative Investments, which include REITs (Real Estate Investment Trusts), are often sold as an alternative to more traditional stocks, bonds, and stock and bond funds. These higher-risk investments are often touted for their high returns, especially in a low interest rate environment, however those high returns are accompanied with corresponding high risk.

In addition to their often high-risk nature, alternative investments may also have significant liquidity risk. Because they are typically not traded on an exchange, investors may not be able to determine the actual value of the investment, and further if the investment experiences problems, investors may not be able to sell or otherwise get out of the problem investment.

Pursuant to the Virginia Securities Act, financial advisors are required to disclose the risks associated with investments that are being recommended, and the Act provides for an award of rescission or losses, interest, and reasonable attorneys fees.

Prior to recommending the purchase of specific investments or a specific investment strategy to a customer, a stockbroker / financial advisor such as Mr. Starke is required to determine that the investments are suitable to that particular investor (or in the “best interest” of the customer after 2020). A suitability determination is based upon many different factors such as age, investment objectives, risk tolerance, employment situation, needs, income, assets, and investment experience. If an advisor’s recommendations of unsuitable investments result in the investor incurring significant losses, that investor may have a suitability, negligence, and breach of contract claim against the broker and his/her firm.

Generally, retirees and those on a fixed income should not have their life savings concentrated in high-risk illiquid investments due to the risk of loss as well as the difficulties of selling the investments.

Greco & Greco’s local Virginia-based lawyers have been representing Virginia residents for decades in claims against their financial advisors and brokerage firms. If you have suffered losses in unsuitable high-risk and illiquid investments and wish to discuss your potential claims with a local lawyer, please contact Scott Greco for a free attorney consultation about your potential case.

Greco & Greco is investigating investor losses in the following alternative investments:

• GWG L Bonds
• Moody National REIT
• Mobile Infrastructure
• Parking REIT
• Necessity Retail REIT
• American Finance Trust
• Silver Star Properties REIT
• First Capital Real Estate Trust
• Priority Income Fund
• American Hospitality Properties Fund
• Phoenix American Hospitality
• Commonwealth Capital
• Hospitality Investors Trust
• American Realty Capital Hospitality Trust

According the the FINRA Letter of Acceptance Waiver and Consent found here, Mr. Rowe refused to provide documents in response to a request of FINRA investigators. The AWC, signed by Mr. Rowe, imposed a bar on Mr. Rowe’s association with any FINRA member in all capacities.

Mr. Rowe’s FINRA Brokercheck report reveals that he voluntarily resigned from Oppenheimer in May 2020 after an allegation that he took a loan from a client without disclosing it to the firm. The report also references multiple customer complaints related to alleged loans, as well as complaints related to unauthorized trading, and inappropriate margin use. Interestingly, a customer complaint regarding a loan made after his separation from Oppenheimer is still listed as “denied” by the firm.

Mr. Rowe’s Brokercheck also reveals two prior settlements of customer complaints in 2005 and 2009 related to allegations of unsuitable trades.

Loans from customers to FINRA registered financial advisors are generally prohibited by FINRA Rules, with a couple minor exceptions. Loans between customers and advisors may often be used by advisors to hide conversion, theft of monies, or other wrongful conduct. FINRA Rule 3240 sets out the limited exceptions to the general prohibition, including loans between family members, and situations involving relationships between the parties outside the customer-broker relationship. Even under those limited circumstances, the loans have to be allowed by the firm, and have to be approved by the firm.

Virginia securities regulations, and those of many other states, also prohibit loans between securities brokers and customers. See 21 VAC 5-20-280 which consider the following to be a violation of duties to observe high standards of commercial honor and just and equitable principles of trade: “1. Engage in the practice of lending or borrowing money or securities from a customer, or acting as a custodian for money, securities or an executed stock power of a customer.”

The Virginia securities fraud attorneys at Greco & Greco have represented multiple customers in FINRA arbitrations over the years involved in recommended loans to securities salespersons in violation of FINRA Rules and state regulations. If you would like to discuss your situation with an attorney at no charge, please contact Scott Greco for a free attorney consultation.