Midsize wealth manager allegedly missed assistant’s fraud for 7 years
December 15, 2021
By Tobias Salinger, FinancialPlanning.com
One wealth manager had a financial advisor and a sales assistant who defrauded their clients in separate schemes while operating out of the same office, according to investigators.
Midsize independent broker-dealer American Portfolios Financial Services agreed to pay $225,000 under a Dec. 10 settlement with FINRA about its supervision of the office. The Holbrook, New York-based brokerage with 892 registered representatives has paid restitution of $383,000 to clients who lost money through the conversions of the former assistant, Kimberly Sredich, as well as settlements totaling $575,000 to ex-customers of barred rep Mark L. Hopkins, according to FINRA BrokerCheck and documents filed in Michigan’s Eastern District.
Sredich began her two-year federal prison sentence in late September after pleading guilty to money laundering and conspiracy to commit wire and mail fraud.
“The lesson for broker-dealers is, when firms grow quickly, they run the risk of outpacing back-office ability to properly supervise and track their advisors,” IBD recruiter Jon Henschen said in an email. “Combining fast growth with a broker-dealer that prides itself in operating their firm like Southwest Airlines, keeping heavy cost controls in place which equates to substandard staffing levels, further adds to the probability that compliance issues will arise.”
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