Bruce Wilkerson, who played 11 seasons in the NFL for both the Los Angeles Raiders, Green Bay Packers, finally retiring as an Oakland Raider, was awarded $2 million in damages last week after losing $650,000 in a Ponzi scheme run by Robert Gist, a broker at Resource Horizons Group in Marietta, Georgia.
The firm in question had 220 brokers and was forced to close in January after a FINRA arbitration panel found that it was responsible for the misdeeds of one of its brokers who used almost $3.5 million in client funds (Wilkerson’s included) for his own personal use.
Gist ran his own personal Ponzi scheme for 10 years absconding funds from at least 32 clients. In 2013, he settled with the SEC agreeing to pay $5.4 million to settle charges levied by the Commission.
According to Investment News, the findings of the FINRA arbitration panel make it clear Resource Horizons Group could have done more.
“The panel agreed unanimously that there were sufficient events, actions and behaviors by [Mr. Gist], prior to and during his association with [Resource Horizons Group] that could have been viewed as 'red flags,'” the panel wrote in an arbitration award last year. “These red flags were such that they warranted further concentrated efforts to conduct investigations by respondent [David] Miller which resulted in a negligence in hiring.”
The lesson: Firms on either side of the border need to remember that advisor oversight isn’t a part-time job but a full-time occupation.
That said, no matter how much muscle regulators bring to bear on financial advisors – it doesn’t seem to matter. Mary Jo White, chair of the SEC, can the U.S. should have one standard (fiduciary) for all retail investment advice but in the end unscrupulous individuals are going to find ways around the system.
Like a terrorist bent on destruction, you can’t regulate bad behaviour.
For Bruce Wilkerson and the rest of the clients hurt by Gist’s penchant for the good life, there’s no solution that is too harsh.