UBS Stockbroker Sanctioned For Breach Of Fiduciary Duty
Ronald Dale Broadstone of New Albany Ohio a stockbroker formerly employed by UBS Financial Services Inc. is the subject of a Division Order in which he was ordered to cease and desist from engaging in conduct violative of Ohio Securities Act based on the Division’s findings that (1) Broadstone engaged in manipulative and deceptive acts by procuring money from a customer without proper consent and (2) Broadstone violated his fiduciary duty to two customers through his misuse of a trust. In the Matter of Ronald Broadstone Order No. 18-024 (July 16, 2018).
According to the Order, a trust account had been established by Broadstone at UBS Financial Services in which he placed the customer’s trust assets. Broadstone was listed as a successor trustee on the customer’s account. The Order stated that a security-backed lined of credit had then been applied for and seemingly obtained by Broadstone in the trust’s name which required the obligations relating to that line of credit to be secured by trust assets and for the loan to be repaid by the trust. The Division stated that $379,580.84 had been borrowed by Broadstone between June 5, 2014 and December 20, 2016 which he utilized for his own benefit.
The Division noted that when Broadstone was investigated by Financial Industry Regulatory Authority (FINRA), he provided the regulator with recorded testimony about his actions, admitting to having failed to advise a beneficiary of the trust that Broadstone procured a line of credit account and that he borrowed funds for his benefit. The Order stated that Broadstone failed to set forth any particular terms for the repayment of funds he borrowed. Broadstone instead testified to FINRA personnel that his life insurance policy would somehow be used to repay customers or that his repayment could come by way of bonuses received from employment at UBS or from employment elsewhere – events that the Division claimed never to have transpired.
Ohio Division of Securities found that Broadstone’s deceptive borrowing arrangement was violative of R.C. 1707.01(J). The Division also found that Broadstone failed to administer the trust for the benefit of the beneficiaries; conduct violative of OAC 1301:6-3-44(E)(1)(f).
Broadstone has been barred from associating with any FINRA member in any capacity based upon consenting to findings that he failed to cooperate with a FINRA investigation into accusations of his misappropriation of customer funds. Letter of Acceptance Waiver and Consent No. 2017052707101 (Apr. 20, 2017).
According to the AWC, FINRA investigated whether Broadstone: possibly settled a customer complaint outside UBS Financial Services’ auspices; effected unauthorized trades in customer accounts; and misappropriated or misused a customer’s funds. Broadstone provided recorded testimony for FINRA personnel on April 18, 2017; however, he failed to fully respond to FINRA’s questions and then failed to complete his testimony or participate any further in the investigation. FINRA found Broadstone’s conduct violative of FINRA Rules 2010 and 8210.
FINRA Public Disclosure reveals that Broadstone has been identified in three customer initiated investment related disputes that concern allegations of his misconduct when he was employed by UBS Financial Services. In fact, Broadstone is referenced in a customer initiated investment related arbitration claim which was resolved for $90,000.00 in damages based upon accusations that equities recommendations were not suitable and the customer’s account was handled in a negligent manner.
On December 6, 2016, a customer initiated investment related complaint in regard to Broadstone’s activities was settled for $18,848.31 in damages founded on allegations against Broadstone of the unauthorized trading and distribution of the customer’s funds; and the failure to follow the customer’s instructions. On June 20, 2018, another customer filed an investment related complaint involving Broadstone’s conduct where the customer requested damages estimated to exceed $5,000.00 based upon accusations against Broadstone of misappropriation between January 20, 2016 and March 22, 2017 which was during the period that Broadstone was associated with UBS Financial Services.
Broadstone was discharged by UBS Financial Services on March 21, 2017 founded on allegations of his failure to conform to the firm’s policies relating to complaint reporting; failure to be truthful to the firm when it investigated his activities; and mishandling of a customer’s trust account when Broadstone was trustee.