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The Financial Industry Regulatory Authority (FINRA) announced on December 3, 2013 that it has barred brokers Fernando L. Arevalo and Jimmy E. Caballero from the securities industry for wrongfully converting approximately $300,000 from an elderly widow with diminished mental capacity, and for failing to fully cooperate with FINRA’s investigation. Arevalo and Caballero’s misconduct occurred while employed as brokers with JPMorgan Chase Securities, LLC. Although JPMorgan was not a party to this action, it reimbursed the elderly customer for the money Caballero and Arevalo converted.
Susan Axelrod, Executive Vice President of Regulatory Operations, said, “One of FINRA’s top priorities is to protect senior investors. We will continue to aggressively pursue and rid the industry of brazen brokers who take advantage of vulnerable customers.”
FINRA’s investigation found that the elderly customer maintained accounts at JPMorgan and a related bank affiliate. Between April and July 2013, the customer deposited approximately $300,000 in proceeds from the sale of two annuities into a bank account Arevalo had opened for her. The funds were then withdrawn from the account via two cashier’s checks, and on the same day, Caballero deposited the money into a joint account he opened in his name and the customer’s name at a different bank. When the bank questioned the deposits and required further confirmation before clearing the deposits, Arevalo picked up and drove the customer to the bank to confirm the source of the funds. Funds from the account were then depleted through numerous checks payable to Arevalo, and Caballero and Arevalo used the account debit card for personal expenses including payments on a real estate loan, car loan and various retail purchases. The customer was unaware of any withdrawals or purchases against the joint account by Arevalo or Caballero, and did not authorize the transactions.
In addition, Arevalo failed to provide testimony to FINRA. Although Caballero initially provided testimony to FINRA, he subsequently refused to provide additional information that was relevant to the investigation.
In concluding these settlements, Caballero and Arevalo neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.