Not following protocols can land an advisor in a heap of trouble. Just ask Karen Ann Vodden.
The former sales manager at Blackhawk Bank in Rockford, Ill., was recently suspended for two years and fined $40,000 by FINRA for failing to disclose her role as an agent under powers of attorney for her elderly aunt and uncle.
Vodden allegedly exercised her authority under the powers of attorney to sell her aunt and uncle's home, accept $38,000 from them in the form of a gift and a loan, and execute securities trades on their behalf.
Vodden, however, did not have the authority to do so because the powers of attorney were not approved by Raymond James, the third-party marketer for the bank.
In addition to acting beyond her authority, she violated several Raymond James policies, FINRA said. For starters, she purportedly issued a check from her aunt's and uncle's account in the amount of $26,000 as a gift to herself, an action that required Raymond James' prior approval. Raymond James prohibits its registered reps from accepting gifts from customers in excess of $100 per person without the firm's pre-approval, FINRA said. (Vodden's aunt and uncle were customers of the bank.)
Vodden also allegedly issued another check from the account for a loan to herself in the amount of $12,000, violating the firm’s policies prohibiting reps from borrowing money from customers.
Lastly, she purportedly executed 10 securities trades on her relatives' behalf even though she did not have discretionary power to do so.
Making matters worse, Vodden made false statements to Raymond James. She claimed that she issued the checks for the gift and the loan to pay for her aunt and uncle’s hospital and ambulance bills, when in fact she used the money to pay for personal expenses, FINRA said.
Vodden declined to comment on the sanctions through her attorney, Andrew May of Chicago. In her settlement with FINRA, she neither admitted nor denied the charges but consented to an entry of FINRA’s findings.
Vodden was dismissed from Blackhawk Bank in December 2013. She had been employed there since May 2010, according to her BrokerCheck report.
Raymond James declined to comment on the matter, saying only that she was terminated in December 2013.
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