Hypothetical 1

You have just referred one of your elderly clients to a local accountant.  The accountant is in his 40’s.  You have seen him around town for years.  He regularly eats breakfast at an expensive local restaurant.  He appears to be popular at the restaurant.  His office is located in a good part of town.  He is a nice guy.  You have heard that in addition to being an accountant, he also advises his clients about investments.  So, what can possibly go wrong with referring one of your elderly clients, for accounting purposes, to this gentleman?  Well, lots can go wrong.

As it turns out, for years this accountant, while being registered as a stockbroker/financial advisor, was alleged to have been soliciting his clients to co-invest in various internet businesses operated by another accountant’s son.  The accountant was further alleged to have signed promissory notes in favor of his customers, for an aggregate amount in excess of $1 million.  When his former broker-dealer employer learned of his conduct, he was fired.  His former employer, the broker-dealer, has paid settlements in excess of $500,000 to several investors.  As the results of an investigation initiated by FINRA, the Financial Industry Regulatory Authority, the accountant was suspended for two years from acting in any capacity with a FINRA member firm.  That suspension ends in December 2013.  The accountant’s Florida accounting license remains in good standing.

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