A Russellville financial adviser whose state registration was suspended earlier this year for refusing to cooperate with a regulator investigation has agreed to pay a $5,000 fine and more than $4,100 in restitution for his handling of a widow’s account.
Arkansas Securities Commissioner Heath Abshure issued the consent order Monday against W. David Crain, a former representative of St. Bernard Financial Services Inc. of Russellville.
More: Download the consent order (PDF).
Crain’s registration as a representative and agent, which had been suspended since Feb. 28, will not be reinstated for at least four more months and only if he retakes the required examinations, according to Abshure’s order.
Crain neither admitted nor denied the findings of fact in the order, which detailed his handling of the IRA account of an unidentified client (“Arkansas Resident 1”) who died in February 2013.
According to the Arkansas Securities Department’s investigation, AR1’s widow, identified only as “Arkansas Resident 2,” informed Crain of her husband’s death within a few weeks. She was the beneficiary of her husband’s IRA, but she never signed an advisory agreement with Crain, nor did she sign any document given him authority to make discretionary trades in the account.
Over the next 10 months, Crain made trades in the account, including buying inverse and leveraged exchange traded funds and holding them for weeks and months at a time, although such instruments were intended to be used by sophisticated investors to manage daily trading risks.
During this time, Crain submitted an updated client profile form for the account to his supervisor at St. Bernard, Robert Keenan, which continued to list AR1 as the account owner.
St. Bernard is the firm that employed Steele Stephens, the bond trader who admitted making the payments to former State Treasurer Martha Shoffner that resulted in her conviction in March on 14 counts of bribery and extortion.
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