Practical Application

A few months into her new career, Amy Adams’s firm was rocked with a big scandal. Two brothers, who were respected and admired for their apparent financial success, were accused of improper handling and use of client funds. While this came as a surprise to many of the other securities professionals, many of the clerical staff at the office had long recognized some irregularities in the way that Carl and Kevin Rook had handled client funds, securities, and supporting paperwork. Thankfully for the Rooks’ clients, as well as the firm’s reputation, their unethical behavior was discovered before the damage got worse.

At the core of the Rooks’ behavior was the fact that they seemed to confuse their clients’ assets with their own. It turns out that the brothers would often deposit client checks to their own account for 2–3 weeks at a time, to assist them in qualifying for large mortgages and expensive car loans. This commingling of their assets with those of their clients too