According to FINRA, John E. Pelletier appealed an Office of Hearing Officers decision to the National Adjudicatory Council on July 19, 2024. Pelletier was fined $10,000 and suspended from association with any FINRA member firm in all capacities for three months based on findings that he executed unauthorized transactions in a customer's retirement account.

The customer, a retiree, entrusted his employer-sponsored 401(k) retirement savings account, representing two-thirds of his financial assets, to Pelletier to roll over into an individual retirement account. The customer expected to rely on $500 monthly distributions from the account for years to supplement his Social Security income. However, after setting up the account, Pelletier executed trades to enable distributions at the direction of the customer's ex-wife who was not an authorized agent.

Subsequently, the customer's ex-wife nearly depleted the account by spending the funds without the customer's knowledge. Pelletier claims that the customer gave him oral authorization to accept the ex-wife's trade instructions. When the customer discovered his account depleted, he contacted the firm and was informed that his ex-wife was named as an agent on the account pursuant to a notarized document with the customer's signature giving her full trading authority. The customer denied signing the document and stated it was forged.

The customer filed a civil suit against Pelletier's firm, his ex-wife, and a notary who notarized a forged trading authorization. The parties settled the suit, and the firm, ex-wife, and notary paid a total of $55,115. Pelletier was not required to contribute to the settlement.

This case illustrates the critical importance of ensuring that transactions are properly authorized and that trading authorizations are genuine. The sanctions are not in effect pending review by the National Adjudicatory Council.