Warning: Sleaze and bad regulation ahead

By Staff | January 25, 2012 | Last updated on January 25, 2012
1 min read

Sometimes it’s hard to tell what tarnishes the financial services industry more: the occasional criminal act by a broker, or the soft touch of regulators. A case from the U.S. illustrates how both sides can be at fault.

Ralph Edward Thomas, a broker in Baltimore, has pleaded guilty in federal court to stealing more than $750,000 from one client account. The account was a trust…for a little girl…with cerebral palsy.

Not satisfied with that haul, Thomas took out a mortgage on the house of the girl’s mother. Three times.

As one might suspect, this family was not the only victim. He also stole $75,000 from the account of an 85-year-old woman who had dementia.

After pleading guilty to the criminal charges, Thomas then faced action by U.S. self regulatory organization FINRA. The outcome of that hearing was disappointing, to say the least.

It is perhaps best summarized by securities lawyer and noted Wall Street blogger, Bill Singer.

“Notwithstanding the epic nature of Thomas’ atrocities, FINRA still felt it okay to accept a settlement that did not require him to admit its charges,” Singer writes.

“As if this low life was going to show up and contest a lousy self-regulatory proceeding while he’s awaiting sentencing in federal court? Why not demand he settle and admit his FINRA violations—after all, FINRA didn’t demand one cent in sanctions from this broker.”

Advisor.ca staff


The staff of Advisor.ca have been covering news for financial advisors since 1998.