Posted in: FINRA | Greedy Brokers |
Yesterday FINRA announced it was permanently barring Florida broker Michael J. DiMare from the securities industry. The former registered representative was found to have misappropriated $1.9 million in client funds, in addition to forging account statements.
DiMare, who was based in Ponte Vedra Beach, Fla., allegedly persuaded clients to invest in tax-free corporate bonds from 2001 to 2008, which FINRA now say never existed. More than a dozen of his clients wrote checks to John Hancock Mutual Life Insurance Company, his then-employer, believing them to be for legitimate investments. Instead, DiMare pocketed the money.
To cover up his broker fraud, FINRA said, DiMare even sent phony account statements with the John Hancock letterhead telling his clients they owned these fake assets. Authorities believe DiMare continued this practice after moving to ING Financial Partners in 2006.
According to FINRA’s full report, which can be viewed in full here, John Hancock began investigating DiMare’s behavior in 2008 after customers complained. After John Hancock contacted ING Financial, DiMare was immediately terminated.
As mentioned before on this blog, simply punishing a broker after the fact is not enough. It is nice for John Hancock to have investigated the matter, but they only did so to appease angry customers who had been already defrauded out of millions of dollars. ING Financial which manages thousands of independent brokers worldwide, also had no idea what DiMare was up to.
The Wall Street Journal correctly pointed out that this is also the latest in a string of ING Financial brokers who have faced scrutiny. Rhonda Bread, another independent ING Financial broker who plead guilty to securities fraud in April, stole $9.4 million of her clients’ money in similar fashion.
Brokers have such a tremendous influence over their customers’ future. DiMare’s clients apparently had no reason to suspect wrongdoing until it was too late. He worked at established firms, promised them annual interest rates of 6 percent and 14 percent on their corporate bonds, and said all the right things.
He was able to do this for seven years, without any supervisors knowing. The Florida Times Union said DiMare “had hundreds of clients,” while working at both firms, meaning many others could have been affected by DiMare’s financial misconduct.
This sort of behavior, as deplorable as it may be, happens all over the country. While bad brokers need to be stopped, of course, firms need to take better responsibility of brokers under their umbrellas.
