Broker's entanglement in estate spotlights abusive practice

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[July 21, 2015]   By Richard Satran

(Reuters) - An Arizona broker who tried to inherit $1.8 million from a client with Alzheimer’s disease has been barred from the securities industry in a case that highlights an ugly practice against vulnerable adults.

The Financial Industry Regulatory Authority (FINRA), Wall Street’s industry-funded watchdog, last week barred John Anthony Waszolek from the securities industry for his 2009 attempt to become the beneficiary in a client's will. The widow, who died in 2010 at age 83, had struggled with dementia and blindness.

Waszolek, who could not be reached for comment, joins roughly six other brokers whom FINRA disciplined in unrelated cases during the past year for naming themselves as beneficiaries, trustees or executors of clients' estates. Major brokerage firms typically prohibit the practice, which could lead to conflicts of interest in investment decisions or exploitation.

Waszolek, who agreed to be barred from the business in a civil settlement with FINRA on July 13, neither admitted nor denied the regulator’s allegations. His son, Eric Waszolek, still works at Raymond James and is not accused of any wrongdoing.

John Waszolek joined a Scottsdale office of Raymond James Financial Inc in 2012, saying in an interview at the time that he left Morgan Stanley because "I wanted to find a smaller, more nimble, client-friendly company," according to FINRA.

Waszolek, in fact, gave very personal attention to clients – but not always for the friendliest of reasons, FINRA said in the settlement. Waszolek had paid little attention to the elderly client's account until she developed dementia and became "frail, withdrawn, and isolated," FINRA said in the settlement.

Waszolek, who was at UBS at the time, began taking the client to doctor appointments and visiting with her and care providers at an assisted living residence, FINRA said.

UBS declined to comment about the case.

The broker was present when a doctor diagnosed the client with Alzheimer's. While tracking her medical care, Waszolek began to intervene in her financial affairs, according to the FINRA settlement.

Waszolek gained power of attorney, despite a neuropsychologist's conclusion that the client "had no recollection of recently having drafted very specific plans to alter her estate plan." Waszolek then managed a trust that his client had established for charity donations, according to FINRA.

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He used his power of attorney and control of the trust to have himself named beneficiary of the account, valued at $1.8 million, according to the settlement. The broker concealed the arrangement from his employer at the time, UBS, and then from Morgan Stanley, where he brought the account in 2009.

Morgan Stanley terminated him in 2011 for concerns about a client's bequest to him, according to Waszolek's publicly available professional disclosure report. Morgan Stanley declined comment on Friday, other than to say that he no longer worked at the firm.

A Raymond James spokesman, in a statement to Reuters on Friday, said FINRA's complaint made it apparent that Waszolek did not give "accurate and complete information" about his termination from Morgan Stanley.

While securities regulators point to beneficiary changes as signs of possible senior abuse, the changes often go unnoticed until after the victim dies, lawyers and regulators have said.

(Reporting by Richard Satran; Editing by Suzanne Barlyn and Nick Zieminski)

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