Thanks, V!!!! Wow - had never thought of the permit office - great idea! If Mom and S/dad find out - oh well. It would be better to do that and risk their finding out - than have the house torn down. Through the grapevine, we know that so far, Mom and S/dad have not been able to get financing to do anything to the property in question. And the cheapest method would be to burn it down and I think there is a burning ban right now. C's paternal g/father is not so sure this is what we should do at this point, but I am thinking - better safe than sorry. All it takes is one day for them to knock that house down. Then that is that. Of course, we would have the value of the land to work with. But they will not proceed w/ razing the house until they have secured financing . . . and that is what we DO NOT want to occur. THank so much for taking the time to post - it is really really appreciated.
Well, if they won't raze the house until they get financing, and they can't get financing, then you may have a little time. If they have equity in any of the other properties they may be trying to finance against them, too. That will be one of the dangers if C gets title to the properties--they may be mortgaged to the hilt, and if the mortgage isn't paid then the mortgage company can foreclose. It may be better to lie low and not let Mom and stepdad know what's going on yet. They may still think that C is pissed but ignorant of anything she can do. Of course, if they have friends at the brokerage they may already have an idea about what's going on.
Okay, a note of clarification here, as this is important, maternal g/f CANNOT withdraw funds once deposited into an UGMA account. ONLY the "custodian" can withdraw funds, i.e. C's Mom. So, regarding "debt", this is supposed to mean there is a "debt instrument" for the $35K and held in "C"'s UGMA account, though this is not permitted either. I'm a little scared w/"debt on g/f's taxes", usually this means a "write off". But the important function here is that g/f could NOT withdraw the funds, only the "Mom" could have done it. Well, this is okay, as the UGMA stays "in tact" when transferred. However, the current brokerage firm will/should have a record of "transferred from". All records are transferred when an account gets transferred to another firm. "Mom" would have had to sign the transfer papers. Again, g/f could NOT transfer the account, only the custodian could. However, usually an account "transfers" with a broker, when they move from one firm to another. I'm guessing the broker (now) may have been with the account from the opening. The SEC is not the organization to call right now, nor is it the right time for them. As I suggested, if you call anyone (in an official capacity) call the FINRA/NASD. Good on the timeline, this will make the whole "soap opera" easier to manage. The family meeting is an excellent idea. "C"'s grandparents will be a good information source, but they have no more legal entitlement that you do. During the family meeting, decide whom should be granted some POA to help with all the tasks. Definitely, and they can tell you if the broker came from this firm also! But you'll have to ask. FYI, look up the broker's history on the FINRA website, it's ALL there.
A few things... Okay so my mother's dad was the custodian until he gave my mother the custodial position in 2001. This just happens to be when my mom got remarried. Also...I called the brokerage and they gave me the name of the brokerage where the account was transferred from and a reference account number. I just called that brokerage and left a message with their operations manager so we'll see if I get a call back. Do you think they will still have the files on this account?
Looked up the broker on the FINRA website and found that he transfered brokerages at the exact time that my account did...so does this mean that he might have all the records? I have talked with him before, but he said he probably wouldn't be able to come up with those records. What do you guys think?
Okay, this gets worse! If g/f was the "custodian", and also the "donor" of the "gift" (deposits) into the account, then g/f still CANNOT make withdrawals, this is illegal, and no (decent) brokerage firm would allow it. I'm beginning to see the "creativity" that must have occured around this account. I think "you were investing in yourg/f's business, whether you knew it or not! That is the only way the money could have gone from your account to the business. I know this is a bit complicated, but this is pretty much how it would have to transact. If the current broker is the same as the one during these transactions, he's in HUGE trouble. FINRA/NASD do not just look at breaking the "letter of the law", they look at breaking the "spirit of the law". It is pretty obvious this has been done. You will need to see exactly what the holdings (securities and types, cash, etc) are in the account. Also, a few pointers here: since your g/f was initially both the "donor" and "custodian", he must have put your Mom on as an alternate or "designee" to succeed him. Otherwise, there requires a court order to change it. Any "withdrawals" made by your g/f would have to be listed as "for the benefit of "C", and your g/f sounds savvy enough to know he was required to keep records. So, he must have them somewhere. The other interesting "law" here is: even if you (had) wanted to "return" some of the account to your g/f, Mom, whomever, legally you COULD NOT. Once the "gifts" are in the account, that's where they stay, until you reach the age of majority. This mess smells more and more, no question there are illegalities in this activity. Just a question of what you want to do with it. Related to all the real estate mentioned; I think you have enough here to enter a petition to stop any, and all, transactions on your Mom's and s/dad's real estate holdings, until this is cleared. No judge would deny you with what you have now for evidence.
The good part of this little gem is that you don't have a change of brokers to complicate things. This broker has handled the account for a substantial period of time and you know where he is. He's on the hook.
This means he should have records somewhere, or he "knows" where/how to get them! I doubt he'll have all the records, but he better start talking! He should have a copy of the original "account form", and probably a record of intitial deposit. He probably won't have hard records of all transactions, but he could probably get them from the previous firm. Or, at least summaries. He knows that if the NASD walks in, they'll "find" the records, start "leaning on him". "C", it's time to start "dropping hints" of what you "might know" when this broker makes statement that do not sound "right" to you. He's going to bluff, start calling him on his bluffs.
Okay so there is still a chance that these records are out there from the past firm this account was in? I have been worried about the 7 year rule...
Well the broker has stated from Day One that there are no records b/c the account "used to be somewhere else" and C only discovered that it was actually at another brokerage. She thought when he told her that - it meant - at another location w/in the same brokerage (meaning - storage vault that had been cleaned out or items "lost" or destroyed somehow). It appears the account was first invested w/ Bradford, then - were they bought out by UBS? - and then UBS bought Paine Webber, then the broker moved from Paine Webber to the present firm. For all I know, this broker has handled the account from inception w/ Bradford. But again - he says "no records" on it. I have emailed attorney to see if he wants to take case or if he recommends someone else.
One key point. No organization likes to have the Regulators walk in and ask questions. They will ALWAYS find SOMETHING. And if they find something, they may go look for other things. In this case, not only is the broker on the line, so is the office manger, the compliance officer, and the company itself. They don't like the consumer getting hosed. Regulators demand answers and documents; firm members provide them. There is no debate over the finer points. That's the way it works. When the Comptroller of the Currency investigates a bank, the bank gets the bill for the Comptroller's time and effort. Not sure if NASD and/or FINRA do the same, but such investigations are expensive for those being investigated. That cost comes out of profit.
Okay, what this broker is saying is BS. First, brokers ALWAYS keep thier "book", thier "book" is all the customer account agreements, and pertinent information. It never matters that an account is transferred, there is always a trail. Yes, some transaction records are disposed of after the required retention period has expired. But, there are always "records". Remember, brokers are salesmen, period! They make a living at being "smooth", and talking. They tend to be cocky and think they're smarter than they really are. "C" needs to become the "wolf in sheep's clothing", and let this broker talk himself into the corner. The "acid test", ask the broker how he knows his commissions are correct! If there are "no records", then how does he prove he is the "broker of record"? Bottom line here, at your family meeting this holiday, discuss what it truly is that you want out of this broker/firm. Is it just history and information? Is it some degree of restitution (money)? What your objective is will determine your strategy, and required actions, in dealing with this broker and firm. If you just want the information and history, go in screaming and yelling and threatening violations. You'll get the paperwork and verbal history. If it is "damages", then you'll have to play it cool for a while. But don't give them too much time to prepare defenses. It is a very simple choice for the broker and firm; they would much rather take a violation for "failure to maintain proper records", than take hits for "failure to exercise fiduciary responsibility, mishandling of customer funds, illegal trades, failure to supervise, etc. Take the time you need to make a proper decision, but do not waste any time. This firm is working to cover and defend itself as we speak. Good move on contacting the attorney!
There is no charge for an investigation, the FINRA/NASD is funded through member "dues" and FINES. There is ALWAYS a fine! Yes, they always find something, and it costs. They also have the authority to "shut down" a broker, office and/or firm at a moments notice. This is the scariest part for everyone. You MUST notify your customers that you cannot transact business. The other aspect of FINRA/NASD is that they have a large latitude in determining a "violation", and they use it. You really have "no defenses", you just have to take it, to stay in the business.
Ani, you wrote that you think that getting the 'resort house' would make reparations as the value is about what the account was. You mentioned that the lot would be worth about 80K. I remember a post from Bizwiz or Oracle a few days ago, who figured that the account could be worth +800K or so, if it had been handled properly. So, don't settle too low, if there's a way to get more. Not being greedy, but only trying to make up for what happened. If they only had to pay 80K, then it's as if they'd been able to borrow for years and years at 0% interest.
I agree. Don't settle for anything right now, and especially don't do anything without talking to the attorney. I'd say that right now, I'd be tempted to sue them for everything. Even grandfather has culpability, if he has any assets I'd include him, too. But that's up to an attorney.
$100K invested 22(+) years ago would (roughly) be worth the following amounts at the various average rates of return: 12%: $1.2 million 10%: $800,000.00 8%: $520,000.00 You can see by the numbers the need for "prudent investing" by the custodian,and the responsibility that comes with the designation. Of course there are always market cycles, but an average 12% rate of return is not unrealistic for the years covered here. I'm sure these number are making "C" feel ill, but it is a "fact" that must be looked at in this situation. Let's pick 10% as an average rate of return for this time frame, about $800,000.00 is the "true damages" done here, not $70,000.00. I hope this helps puts things in perspective for "C".
Wow... I can't wait to sit down with an attorney and see if there's anything to be done I also can't wait to see if I get a call back from UBS... Unbelievable
Everything is mortgaged to the hilt Yeah, everything C's Mom has is mortgaged, and it appears second mortgages as well (or LOC's,whatever). At least, that is how it appears to me by searching deeds and DOTs. I cannot find a DOT on the resort (mountain) house. Tax valuation on the property is $205,000. I think that may be inflated but the market in that resort area has appreciated at an astonishing rate (I own property nearby). House is NOT in good shape, but choice location. We assume mom and s/dad have tried to refinance the house - as they say they want to tear it down and build a new one. Have even said they may sell everything and move into that home if they could build a new one on that lot (and I suppose - retire, LOL). Latest thing C heard thru/ the grapevine was that they had been unsuccessful at getting a loan - and no wonder. Income to debt ratio way too high. G/father has nothing left. Lost millions of $$ in bad investments. And completely blew his parents' estate. This is not supposition - the BK, judgments, joint ventures w/ other land investors - all are easily documented from public records. He holds title to nothing - g/mother had to go to work in her 70s (never had a job before) and holds title to their condo. G/mother was victim of G/father's bad financial management, much as C is today. Very sad situation. We can't prove a thing about mismanagement unless we get earlier documentation. That is what concerns me. Now there is a $14,000 withdrawal in 2003, on Mom's watch, that we cannot match up to a thing that could have been to C's benefit. We do have that. Seems to me that is enuff in itself as she should have to justify what that was for (I suspect - part of payment on land purchase). There is nothing liquid that any of the people involved have. The mountain house would provide C w/ an asset that is going to keep appreciating (once some repairs are made) and would also give her a place to live while attending college. It could also provide her w/ additional income in years to come (as rental property - summer months especially). Here is a sidebar situation that we have to address. C parents "surprised" her w/ a used car b/f she went to college. She did not pick it out, and they said they wanted to do something nice for her - she thought they had bought it for her. Well, they used her money to make the purchase (no surprise there) but the car is titled in her mother's name - C does not have title to it. What do we do about that????? We can note a withdrawal in her account as to when the money was taken out to pay for the car. Since auto insurance is expensive, I am sure the justification is that w/ mom holding title and paying for insurance, this is "saving C money." However, C would prefer to hold the title since her money paid for the vehicle and it is a paid for asset. Should we just leave that alone for now and let it be part of the whole process . . . mother holds title to real property but C's money used to pay for it??? Or should we demand that get turned over to C right now? Mom has done nothing to assist w/ maintenance, new tires, etc.
