Stock Transfer to Withdrawing Member - Embezzlement?
Alicia Peycelon on
We had a member withdraw effective May 1. Our bylaws allow
the remaining members to vote on stock transfer as payout,
which we did and the departing member was agreeable to this.
The member is elderly with some health issues and refused to
provide her information (brokerage account name and number
and name of the broker) saying her broker could transfer the
agree upon shares. This didn't seem correct but we verified
on a call with the member the number of shares of each stock
we planned to transfer, not to exceed the specific value of
her share of the club. I urged the member to have her
broker call ours at minimum. She took the number but there
was no call. Our broker said he couldn't help her without
the information.
A few days later our broker noticed a request to transfer
our entire brokerage account to the member's brokerage.
They successfully blocked it, resulting in a "cancel
request" charge of $125 to our account.
A week later the member's brokerage was able to transfer the
entire brokerage account, $180,000 in stock and aobut $4,000
in cash. (All members have the name and account number,
apparently this was enough to move the account.)
We have been assured by our broker that it will all be
worked out be we are nearing a month now. We immediately
contacted the member telling her to have her broker return
the entire account and we would pay her out by check, the
members no longer interested in stock transfer given the
lack of cooperation by her and her brokerage. Her broker is
now saying she will retain the number of shares originally
discussed, then transfer the remaining stocks back to our
brokerage. Given the passage of time, this now exceeds the
value of her portion of the club at the time of her
valuation.
We are now discussing engaging an attorney to help us. We
are contemplating reporting it to authorities as
embezzlement (but who? surely not the local police?) We know
our brokerage has culpability for the complete lack of
security of our account (we signed no paperwork authorizing
ANY transfer and they failed to block the second attempt to
transfer the entire account.) The brokerage who took the
account did so without authorization and didn't bother to
reach out when their first attempt was blocked.
We have been unable to trade shares, deposit dues, and we
are aware some dividends have been paid for several of our
stocks in the intervening month.
A cautionary tale certainly. What would you do?
Carole Jansen on
What a nightmare.
Curious who your broker is and who her broker is. When you set the account up with your broker, they didn't ask for representatives authorized to make transfers, etc.? Are you a partnership? Do your orgranizating documents set forth officers and what their duties are?
We had a member withdraw effective May 1. Our bylaws allow
the remaining members to vote on stock transfer as payout,
which we did and the departing member was agreeable to this.
The member is elderly with some health issues and refused to
provide her information (brokerage account name and number
and name of the broker) saying her broker could transfer the
agree upon shares. This didn't seem correct but we verified
on a call with the member the number of shares of each stock
we planned to transfer, not to exceed the specific value of
her share of the club. I urged the member to have her
broker call ours at minimum. She took the number but there
was no call. Our broker said he couldn't help her without
the information.
A few days later our broker noticed a request to transfer
our entire brokerage account to the member's brokerage.
They successfully blocked it, resulting in a "cancel
request" charge of $125 to our account.
A week later the member's brokerage was able to transfer the
entire brokerage account, $180,000 in stock and aobut $4,000
in cash. (All members have the name and account number,
apparently this was enough to move the account.)
We have been assured by our broker that it will all be
worked out be we are nearing a month now. We immediately
contacted the member telling her to have her broker return
the entire account and we would pay her out by check, the
members no longer interested in stock transfer given the
lack of cooperation by her and her brokerage. Her broker is
now saying she will retain the number of shares originally
discussed, then transfer the remaining stocks back to our
brokerage. Given the passage of time, this now exceeds the
value of her portion of the club at the time of her
valuation.
We are now discussing engaging an attorney to help us. We
are contemplating reporting it to authorities as
embezzlement (but who? surely not the local police?) We know
our brokerage has culpability for the complete lack of
security of our account (we signed no paperwork authorizing
ANY transfer and they failed to block the second attempt to
transfer the entire account.) The brokerage who took the
account did so without authorization and didn't bother to
reach out when their first attempt was blocked.
We have been unable to trade shares, deposit dues, and we
are aware some dividends have been paid for several of our
stocks in the intervening month.
A cautionary tale certainly. What would you do?
Ira Haas on
We use Fidelity and they have a feature to lock all transfers. Only authorized users can unlock the account. You may want to switch.
Sent from my iPad
> On Jun 10, 2024, at 7:04 PM, Alicia Peycelon via bivio.com <user*14455600001@bivio.com> wrote:
>
> We had a member withdraw effective May 1. Our bylaws allow
> the remaining members to vote on stock transfer as payout,
> which we did and the departing member was agreeable to this.
> The member is elderly with some health issues and refused to
> provide her information (brokerage account name and number
> and name of the broker) saying her broker could transfer the
> agree upon shares. This didn't seem correct but we verified
> on a call with the member the number of shares of each stock
> we planned to transfer, not to exceed the specific value of
> her share of the club. I urged the member to have her
> broker call ours at minimum. She took the number but there
> was no call. Our broker said he couldn't help her without
> the information.
>
> A few days later our broker noticed a request to transfer
> our entire brokerage account to the member's brokerage.
> They successfully blocked it, resulting in a "cancel
> request" charge of $125 to our account.
>
> A week later the member's brokerage was able to transfer the
> entire brokerage account, $180,000 in stock and aobut $4,000
> in cash. (All members have the name and account number,
> apparently this was enough to move the account.)
>
> We have been assured by our broker that it will all be
> worked out be we are nearing a month now. We immediately
> contacted the member telling her to have her broker return
> the entire account and we would pay her out by check, the
> members no longer interested in stock transfer given the
> lack of cooperation by her and her brokerage. Her broker is
> now saying she will retain the number of shares originally
> discussed, then transfer the remaining stocks back to our
> brokerage. Given the passage of time, this now exceeds the
> value of her portion of the club at the time of her
> valuation.
>
> We are now discussing engaging an attorney to help us. We
> are contemplating reporting it to authorities as
> embezzlement (but who? surely not the local police?) We know
> our brokerage has culpability for the complete lack of
> security of our account (we signed no paperwork authorizing
> ANY transfer and they failed to block the second attempt to
> transfer the entire account.) The brokerage who took the
> account did so without authorization and didn't bother to
> reach out when their first attempt was blocked.
>
> We have been unable to trade shares, deposit dues, and we
> are aware some dividends have been paid for several of our
> stocks in the intervening month.
>
> A cautionary tale certainly. What would you do?
Alicia Peycelon on
Wells Fargo Advisors and Merrill Lynch. We are most certainly planning to change brokerages once this is settled.
We do have authorization/designated officers - only the Treasurer and President can request trades or disbursements, Assistant Treasurer can make deposits. We are a partnership, our organizing documents set forth the officers etc.
We use Fidelity and they have a feature to lock all transfers. Only authorized users can unlock the account. You may want to switch.
Sent from my iPad
> On Jun 10, 2024, at 7:04 PM, Alicia Peycelon via bivio.com <user*14455600001@bivio.com> wrote:
>
> We had a member withdraw effective May 1. Our bylaws allow
> the remaining members to vote on stock transfer as payout,
> which we did and the departing member was agreeable to this.
> The member is elderly with some health issues and refused to
> provide her information (brokerage account name and number
> and name of the broker) saying her broker could transfer the
> agree upon shares. This didn't seem correct but we verified
> on a call with the member the number of shares of each stock
> we planned to transfer, not to exceed the specific value of
> her share of the club. I urged the member to have her
> broker call ours at minimum. She took the number but there
> was no call. Our broker said he couldn't help her without
> the information.
>
> A few days later our broker noticed a request to transfer
> our entire brokerage account to the member's brokerage.
> They successfully blocked it, resulting in a "cancel
> request" charge of $125 to our account.
>
> A week later the member's brokerage was able to transfer the
> entire brokerage account, $180,000 in stock and aobut $4,000
> in cash. (All members have the name and account number,
> apparently this was enough to move the account.)
>
> We have been assured by our broker that it will all be
> worked out be we are nearing a month now. We immediately
> contacted the member telling her to have her broker return
> the entire account and we would pay her out by check, the
> members no longer interested in stock transfer given the
> lack of cooperation by her and her brokerage. Her broker is
> now saying she will retain the number of shares originally
> discussed, then transfer the remaining stocks back to our
> brokerage. Given the passage of time, this now exceeds the
> value of her portion of the club at the time of her
> valuation.
>
> We are now discussing engaging an attorney to help us. We
> are contemplating reporting it to authorities as
> embezzlement (but who? surely not the local police?) We know
> our brokerage has culpability for the complete lack of
> security of our account (we signed no paperwork authorizing
> ANY transfer and they failed to block the second attempt to
> transfer the entire account.) The brokerage who took the
> account did so without authorization and didn't bother to
> reach out when their first attempt was blocked.
>
> We have been unable to trade shares, deposit dues, and we
> are aware some dividends have been paid for several of our
> stocks in the intervening month.
>
> A cautionary tale certainly. What would you do?
Alicia Peycelon on
Wells Fargo requires/required no paperwork for trades or transfers. Sell/buy orders have to be given verbally but we always follow up with emails so there is a paper trail. Disbursements are sent via document, Treasurer is authorized signer for these but in the past we required 2 officers sign check requests.
Wells Fargo Advisors and Merrill Lynch. We are most certainly planning to change brokerages once this is settled.
We do have authorization/designated officers - only the Treasurer and President can request trades or disbursements, Assistant Treasurer can make deposits. We are a partnership, our organizing documents set forth the officers etc.
We use Fidelity and they have a feature to lock all transfers. Only authorized users can unlock the account. You may want to switch.
Sent from my iPad
> On Jun 10, 2024, at 7:04 PM, Alicia Peycelon via bivio.com <user*14455600001@bivio.com> wrote:
>
> We had a member withdraw effective May 1. Our bylaws allow
> the remaining members to vote on stock transfer as payout,
> which we did and the departing member was agreeable to this.
> The member is elderly with some health issues and refused to
> provide her information (brokerage account name and number
> and name of the broker) saying her broker could transfer the
> agree upon shares. This didn't seem correct but we verified
> on a call with the member the number of shares of each stock
> we planned to transfer, not to exceed the specific value of
> her share of the club. I urged the member to have her
> broker call ours at minimum. She took the number but there
> was no call. Our broker said he couldn't help her without
> the information.
>
> A few days later our broker noticed a request to transfer
> our entire brokerage account to the member's brokerage.
> They successfully blocked it, resulting in a "cancel
> request" charge of $125 to our account.
>
> A week later the member's brokerage was able to transfer the
> entire brokerage account, $180,000 in stock and aobut $4,000
> in cash. (All members have the name and account number,
> apparently this was enough to move the account.)
>
> We have been assured by our broker that it will all be
> worked out be we are nearing a month now. We immediately
> contacted the member telling her to have her broker return
> the entire account and we would pay her out by check, the
> members no longer interested in stock transfer given the
> lack of cooperation by her and her brokerage. Her broker is
> now saying she will retain the number of shares originally
> discussed, then transfer the remaining stocks back to our
> brokerage. Given the passage of time, this now exceeds the
> value of her portion of the club at the time of her
> valuation.
>
> We are now discussing engaging an attorney to help us. We
> are contemplating reporting it to authorities as
> embezzlement (but who? surely not the local police?) We know
> our brokerage has culpability for the complete lack of
> security of our account (we signed no paperwork authorizing
> ANY transfer and they failed to block the second attempt to
> transfer the entire account.) The brokerage who took the
> account did so without authorization and didn't bother to
> reach out when their first attempt was blocked.
>
> We have been unable to trade shares, deposit dues, and we
> are aware some dividends have been paid for several of our
> stocks in the intervening month.
>
> A cautionary tale certainly. What would you do?
ira smilovitz on
You should file a report with your local police department immediately. You can inform them that efforts are underway to recover the assets, but the fact remains that this is a theft at this point. If you don't get satisfaction from your broker within a reasonable time, you can consider filing a complaint with FINRA. See https://www.finra.org/investors/need-help/file-a-complaint.
Ira Smilovitz, EA
(previously licensed to sell mutual funds and annuities)
Wells Fargo requires/required no paperwork for trades or transfers. Sell/buy orders have to be given verbally but we always follow up with emails so there is a paper trail. Disbursements are sent via document, Treasurer is authorized signer for these but in the past we required 2 officers sign check requests.
Wells Fargo Advisors and Merrill Lynch. We are most certainly planning to change brokerages once this is settled.
We do have authorization/designated officers - only the Treasurer and President can request trades or disbursements, Assistant Treasurer can make deposits. We are a partnership, our organizing documents set forth the officers etc.
We use Fidelity and they have a feature to lock all transfers. Only authorized users can unlock the account. You may want to switch.
Sent from my iPad
> On Jun 10, 2024, at 7:04 PM, Alicia Peycelon via bivio.com <user*14455600001@bivio.com> wrote:
>
> We had a member withdraw effective May 1. Our bylaws allow
> the remaining members to vote on stock transfer as payout,
> which we did and the departing member was agreeable to this.
> The member is elderly with some health issues and refused to
> provide her information (brokerage account name and number
> and name of the broker) saying her broker could transfer the
> agree upon shares. This didn't seem correct but we verified
> on a call with the member the number of shares of each stock
> we planned to transfer, not to exceed the specific value of
> her share of the club. I urged the member to have her
> broker call ours at minimum. She took the number but there
> was no call. Our broker said he couldn't help her without
> the information.
>
> A few days later our broker noticed a request to transfer
> our entire brokerage account to the member's brokerage.
> They successfully blocked it, resulting in a "cancel
> request" charge of $125 to our account.
>
> A week later the member's brokerage was able to transfer the
> entire brokerage account, $180,000 in stock and aobut $4,000
> in cash. (All members have the name and account number,
> apparently this was enough to move the account.)
>
> We have been assured by our broker that it will all be
> worked out be we are nearing a month now. We immediately
> contacted the member telling her to have her broker return
> the entire account and we would pay her out by check, the
> members no longer interested in stock transfer given the
> lack of cooperation by her and her brokerage. Her broker is
> now saying she will retain the number of shares originally
> discussed, then transfer the remaining stocks back to our
> brokerage. Given the passage of time, this now exceeds the
> value of her portion of the club at the time of her
> valuation.
>
> We are now discussing engaging an attorney to help us. We
> are contemplating reporting it to authorities as
> embezzlement (but who? surely not the local police?) We know
> our brokerage has culpability for the complete lack of
> security of our account (we signed no paperwork authorizing
> ANY transfer and they failed to block the second attempt to
> transfer the entire account.) The brokerage who took the
> account did so without authorization and didn't bother to
> reach out when their first attempt was blocked.
>
> We have been unable to trade shares, deposit dues, and we
> are aware some dividends have been paid for several of our
> stocks in the intervening month.
>
> A cautionary tale certainly. What would you do?
Sharon Holley on
I would call the broker daily and consider reporting them to the SEC.
On Monday, June 10, 2024, 4:04 PM, Alicia Peycelon via bivio.com <user*14455600001@bivio.com> wrote:
We had a member withdraw effective May 1. Our bylaws allow the remaining members to vote on stock transfer as payout, which we did and the departing member was agreeable to this. The member is elderly with some health issues and refused to provide her information (brokerage account name and number and name of the broker) saying her broker could transfer the agree upon shares. This didn't seem correct but we verified on a call with the member the number of shares of each stock we planned to transfer, not to exceed the specific value of her share of the club. I urged the member to have her broker call ours at minimum. She took the number but there was no call. Our broker said he couldn't help her without the information.
A few days later our broker noticed a request to transfer our entire brokerage account to the member's brokerage. They successfully blocked it, resulting in a "cancel request" charge of $125 to our account.
A week later the member's brokerage was able to transfer the entire brokerage account, $180,000 in stock and aobut $4,000 in cash. (All members have the name and account number, apparently this was enough to move the account.)
We have been assured by our broker that it will all be worked out be we are nearing a month now. We immediately contacted the member telling her to have her broker return the entire account and we would pay her out by check, the members no longer interested in stock transfer given the lack of cooperation by her and her brokerage. Her broker is now saying she will retain the number of shares originally discussed, then transfer the remaining stocks back to our brokerage. Given the passage of time, this now exceeds the value of her portion of the club at the time of her valuation.
We are now discussing engaging an attorney to help us. We are contemplating reporting it to authorities as embezzlement (but who? surely not the local police?) We know our brokerage has culpability for the complete lack of security of our account (we signed no paperwork authorizing ANY transfer and they failed to block the second attempt to transfer the entire account.) The brokerage who took the account did so without authorization and didn't bother to reach out when their first attempt was blocked.
We have been unable to trade shares, deposit dues, and we are aware some dividends have been paid for several of our stocks in the intervening month.
A cautionary tale certainly. What would you do?
Alicia Peycelon on
Our broker? Both?
Alicia Peycelon on
Our broke spoke to the member and the account is being
transferred back in its entirety. I think the mention of
legal action got a fire under our broker and the member.
I won't be at ease until I see the account myself and have
some assurances from Wells Fargo Advisors that steps are
taken to prevent a recurrence. And we'll be asking for an
explanation in writing as to how this happened.
Jack Ranby on
One item in your original post deserves further comment: " Her broker is now
saying she will retain the number of shares originally discussed, then
transfer the remaining stocks back to our brokerage. Given the passage of
time, this now exceeds the value of her portion of the club at the time of
her valuation"
The withdrawing member is entitled to the number of shares calculated using
the values on the valuation date defined in your partnership agreement. Any
change, gain or loss, in the value of those shares subsequent to the
valuation date belongs to the departing member, not the partnership. When
you get control of all of the shares, you still have to transfer the
original number of shares based on their value on the original valuation
date, not some other number of shares based on a later value.
Jack Ranby
-----Original Message-----
From: club_cafe@bivio.com <club_cafe@bivio.com> On Behalf Of Alicia Peycelon
via bivio.com
Sent: Tuesday, 11 June, 2024 08:26
To: club_cafe@bivio.com
Subject: [club_cafe] Re: Stock Transfer to Withdrawing Member -
Embezzlement?
Our broke spoke to the member and the account is being transferred back in
its entirety. I think the mention of legal action got a fire under our
broker and the member.
I won't be at ease until I see the account myself and have some assurances
from Wells Fargo Advisors that steps are taken to prevent a recurrence. And
we'll be asking for an explanation in writing as to how this happened.
Lynda Feit on
Keep us all posted. This is shocking, but also educational for all.
Our broke spoke to the member and the account is being
transferred back in its entirety. I think the mention of
legal action got a fire under our broker and the member.
I won't be at ease until I see the account myself and have
some assurances from Wells Fargo Advisors that steps are
taken to prevent a recurrence. And we'll be asking for an
explanation in writing as to how this happened.
Alicia Peycelon on
All parties are in agreement that she will be issued a check for the value of her account on her valuation date.
One item in your original post deserves further comment: " Her broker is now
saying she will retain the number of shares originally discussed, then
transfer the remaining stocks back to our brokerage. Given the passage of
time, this now exceeds the value of her portion of the club at the time of
her valuation"
The withdrawing member is entitled to the number of shares calculated using
the values on the valuation date defined in your partnership agreement. Any
change, gain or loss, in the value of those shares subsequent to the
valuation date belongs to the departing member, not the partnership. When
you get control of all of the shares, you still have to transfer the
original number of shares based on their value on the original valuation
date, not some other number of shares based on a later value.
Our broke spoke to the member and the account is being transferred back in
its entirety. I think the mention of legal action got a fire under our
broker and the member.
I won't be at ease until I see the account myself and have some assurances
from Wells Fargo Advisors that steps are taken to prevent a recurrence. And
we'll be asking for an explanation in writing as to how this happened.
John Rice on
Never do business with Wells Fargo. I had a business account that constantly got screwed up by them. Wells Fargo also had multiple scandals and they don't deserve to be around.
One item in your original post deserves further comment: " Her broker is now
saying she will retain the number of shares originally discussed, then
transfer the remaining stocks back to our brokerage. Given the passage of
time, this now exceeds the value of her portion of the club at the time of
her valuation"
The withdrawing member is entitled to the number of shares calculated using
the values on the valuation date defined in your partnership agreement. Any
change, gain or loss, in the value of those shares subsequent to the
valuation date belongs to the departing member, not the partnership. When
you get control of all of the shares, you still have to transfer the
original number of shares based on their value on the original valuation
date, not some other number of shares based on a later value.
Our broke spoke to the member and the account is being transferred back in
its entirety. I think the mention of legal action got a fire under our
broker and the member.
I won't be at ease until I see the account myself and have some assurances
from Wells Fargo Advisors that steps are taken to prevent a recurrence. And
we'll be asking for an explanation in writing as to how this happened.