Question

​​​​​​Yes, this is a question of law, but there is no subject for that on here.

If you don't want to answer my question then please let someone else do it. This is annoying

1. An elderly widow whose income was derived primarily from Social Security and a small pension owned $100,000 in government bonds that she inherited from her late husband. Other than her home and a modest checking account, her bonds constituted her estate. On advice of A. Brokero, a licensed securities broker, she converted the bonds into cash and deposited the proceeds with Brokero to manage. She explained her financial situation and investment objectives. She and Brokero agreed that her funds should be invested in conservative, income-producing investments. Instead, Brokero, who had trading authorization from the widow, bought and sold numerous issues of aggressive stocks for the account, and at the end of two years the account had dwindled to $28,500. During the two-year period, Brokero had earned thousands of dollars in commissions for buying and selling the investments. What, if any, criminal violation is suggested by this scenario?

Answer 1

This situation does not give rise to any criminal voilence but it it does give rise to ethical voilations which are as follows:

1. Duties to Clients - Brokero very well knows that the widow is dependent on money and has a low risk appetite. Her money should have been invested in less riskier stocks. Instead Brokero went against the client profile and invested the money in risky stocks .

2. Conflict of interest - Brokero place his interest before the client interest by increasing the frequecy of transactions to inflate his earnings via commission per transaction.