According to FINRA, Jarrett Carter Thomas has been assessed a deferred fine of $7,500 and suspended from association with any FINRA member in all capacities for 45 days for making an unauthorized transaction on behalf of an incapacitated customer.

Thomas effected a $50,000 fund transfer based on instructions from an elderly customer whom he knew no longer had the capacity or authority to give such instructions. Thomas had received written notice from a doctor at the customer's long-term care facility that she lacked the capacity to manage her personal affairs.

Despite this knowledge, Thomas did not inform anyone at his member firm about the customer's incapacitation. He accepted oral instructions from the customer to transfer funds from her firm account to her outside bank account. The firm did not discover the customer's incapacitation until after Thomas voluntarily resigned.

This case raises serious concerns about protecting incapacitated seniors. When a representative receives documentation that a customer lacks capacity, they have an obligation to take appropriate steps to protect that customer, including notifying the firm and refusing to act on instructions from the incapacitated person.

Thomas's failure to inform his firm prevented it from implementing safeguards to protect the customer. The firm would typically place a hold on the account or require authorization from a properly designated person before processing transactions.

Investors and their families should ensure that proper legal documentation, such as powers of attorney, is in place before incapacity occurs. Family members should also maintain communication with financial firms to ensure they are aware of any capacity issues.

If you have a family member who may be vulnerable to this type of conduct, consider contacting their brokerage firm to discuss protective measures.