Robert Silverman (CRD#4582993) is not currently registered as a broker with the Financial Regulatory Authority (FINRA). Mr. Silverman was previously registered with Cetera Financial Specialists LLC (June 2004 to July 2019). In July 2019, Mr. Silverman was discharged by Cetera Financial Specialists LLC after he had admitted to a violation of firm policy wherein he had accepted account instructions including withdrawal requests from a non-client without written authority from the client.
In September 2019, Mr. Silverman’s FINRA Brokercheck report reflects a customer dispute disclosure alleging over $229,000 in damages by a client alleging a failure to perform fiduciary duties by accepting withdrawal paperwork from a son-in-law, purportedly with a customer signature for deposit to a bank account in the customer’s name, but which had not in fact been signed by the customer.
In June 2020, Mr. Silverman’s FINRA Brokercheck reflects a final FINRA regulatory disclosure that resulted in a fine and suspension for Mr. Silverman. The allegations were not admitted, nor were they denied in the FINRA Acceptance, Waiver and Consent (AWC) that transactions were effected in the customer account based on instructions from the customer’s son-in-law, who was not authorized to direct transactions for the customer. The transactions also included withdrawal requests which also required liquidating transactions of securities.
Unauthorized Trading – Applicable Laws, Rules, and Regulations
More traditionally, when the issue of “unauthorized trading” gets raised it involves a financial advisor acting on his or her own accord without directions or discretion from the customer. Any financial transactions, whether it includes purchases, sales or liquidation, and especially withdrawals of funds, must be properly authorized by the customer. In joint accounts, that might include one or both of the joint account holders.
The unfortunate circumstances above outline some common situations for financial advisors. Often it is one spouse that takes the primary role or has the primary relationship and interaction with the financial advisor. As a practical matter, it is easy in that scenario for that spouse to regularly communicating with the financial advisor to provide instructions regarding another spouse’s account.
Similarly, as more customers are involved in helping aging parents and other family members handle their financial affairs, the primary relationship with the financial advisor may very well be with the son, daughter (or as seen above with a son-in-law). While it may seem like a mere technicality, the titling of the account and the account documentation are not just mere formalities, that paperwork dictates who the assets actually are controlled by, and who (if anyone) has authorization to direct transactions or conduct business in any account.
While unauthorized trading where a financial advisor takes action on his or her own accord may not be commonplace, these other examples of “unauthorized trading” may, unfortunately, be far more regular and commonplace not necessarily as part of outright fraud, but likely more often as a by-product of lax supervision by a firm that is overseeing the transactions and other activities.
For Investors – consider the following potential red flags:
- If a review of your monthly account statements reflects any questionable transactions in the form of purchases, sales, transfers, or withdrawals?
- If there are securities or products in your account that you do not recognize, do not understand, or do not recall purchasing.
- For any withdrawals or transfers out of your account, if you do not recall making the transaction, you should ask to see the documentation or instructions that were relied upon and confirm it includes your directives and your signature.
- If there are investments made in your account, and you did not directly receive the proper disclosures regarding the risks and details related to that investment strategy, investment product, or the material risks were not fully disclosed to you directly – do not “wait and see” how it performs.
- If there are investment strategy issues related to asset allocation, concentration issues in a particular investment, product, asset class, market sector, geographic region, or other lack of diversification, and these risks related to that investment strategy were not discussed with you personally and fully disclosed.
- If issues related to important and material facts such as the time horizon, illiquidity, or other features of an investment product were not fully discussed and disclosed to you personally.
The sole purpose of this notice is to investigate the potential sales practice and supervision issues related to unauthorized transactions by Robert Silverman or Cetera Financial Specialists LLC. If you have personal knowledge or experience relating to those issues, please contact our office at 1-800-856-3352, or email us at [email protected]