Bank churning account

[jeffrc]

I have recently caught a BEA account manager churning my father's account by frequently buying and selling funds with 2% charges, sometimes as often as every two weeks.

The value of the account has dropped more than 15% in nine months just because of the commission charges. The investments have lost money also, but that is not the issue here.

My father has dementia, but believes he can still manage his finances, which he obviously can not. I am doing my best to fight the bank, but so far I seem to be losing because although they had a two month investigation, they will not disclose the results to me because I have no authority on the account.

I am now threatening to expose the bank in the press, and I would like to better understand what is going on. If there is a banker out there, I would like to know how an account manager is compensated from these fund charges.

And what sort of oversight the branch manager should have on the account manager. Is this just a crooked account manager, or is the branch manager also corrupt, and even the entire bank?

[shri]

What sort of account is this? Private bank with discretionary mandate?

[jeffrc]

BEA gold account. No discretionary mandate that I know of. My Dad likely signed off on all trades, but clearly doesn't know what was actually happening. It was not his pre-dementia investment style.

[jeffrc]

No POA. The account manager started taking advantage of him after my mother went into the hospital for late stage lung cancer. We have indeed just applied for guardianship. The bank has locked all of his accounts including a joint account so we now need to support him.

[jeffrc]

That's correct. But he can not access his money. After the guardianship order, we can support him with $16,500 /month. But I do think the bank should compensate him for all the fees! And the account manager should be held accountable.

[jeffrc]

BTW, was the churning of the bond funds done by a bank in Hong Kong?

[jeffrc]

The account manager obviously knew about the dementia, and was also told by my wife. But not in writing. Our plan was that the account manager and my wife could collaborate so that my Dad's expenses could get paid from his account. Instead, the account manager decided to help himself to the fees. Must have been risking his career for relatively little money. But who knows what BEA will do to him. We are not optimistic.

[Viktri]

The account manager obviously knew about the dementia, and was also told by my wife. But not in writing. Our plan was that the account manager and my wife could collaborate so that my Dad's expenses could get paid from his account. Instead, the account manager decided to help himself to the fees. Must have been risking his career for relatively little money. But who knows what BEA will do to him. We are not optimistic.

Many people don't know how to escalate and give up. Get HKMA and other relevant authorities involved. The bank may not have your interests at heart so don't solely rely upon them to fix themself.

[shri]

Another quick question - is the dementia diagnosed or suspected and does your father live with you or by himself?

[big_panda]

Depending on the losses involved, you might consider suing the bank for undue influence. Otherwise at least get a lawyer to write a letter to the bank and invite them to rectify the losses based on your father's impaired mental capacity.