Brokers have a duty to treat their customers in a good faith manner and to execute all direct orders by those customers in a precise and accurate manner. The duty that is owed to clients – often considered to be a fiduciary duty – creates varying levels of broker responsibility based on the sophistication of the customer, the customer’s prior investment experiences, the representations of the broker, and the ability of the customer to verify the broker’s representations.
Sometimes, however, the responsibility of representing the best interests of a client goes by the wayside, as was apparently the case of Ronald Wayne Nichter. Two months ago, Nichter, a former broker with Cantella & Co. Inc., was accused of allegedly forging letters of authorization by signing customers’ names without their knowledge or consent. Cantella’s clearing firm subsequently issued checks made payable to the customers in question.
Nichter admitted to fraudulently endorsing the checks and then depositing them into his own account, thereby converting funds for his own personal use and benefit. According to the Broker Check Web site of the Financial Industry Regulatory Authority (FINRA), Nichter misappropriated approximately $140,000 from 10 customers.
Nichter was employed with Cantella from 2006 to 2013. After learning of Nichter’s actions, Cantella terminated his employment with the firm. In addition, FINRA barred Nichter from associating with any FINRA firm in any capacity.