The FINRA Department of Enforcement has expelled brokerage firm Thornes & Associates, Inc. Investment Securities (“Firm”) and barred its President and Chief Compliance Officer, John Thomas Thornes (“Thornes”), from association with any FINRA member.
According to the Order Accepting Offer of Settlement (“Order”), the Firm, based in Redlands, California, has approximately 1,100 accounts with approximately $120 million in assets under management. Thornes has served as the Firm’s President, Chief Compliance Officer, Director and Secretary since August 2008.
According to FINRA, between December 2010 and January 2013, Thornes converted approximately $4.2 million from two customer trust accounts – one established to provide care for an elderly customer with Alzheimer’s (“Alzheimer Trust”) and the other to provide college scholarships (“Scholarship Trust”). Thornes was the broker of record on both accounts and the trustee of the Alzheimer Trust. Thorne’s mother was the trustee of the Scholarship Trust.
The Order asserts that Thornes used his position as trustee to convert approximately $1.7 million from the Alzheimer’s Trust for the benefit of one of Thrones’ friends or his friend’s creditors. According to the Order, Thornes claimed the transfers were loans, but to date, none of the funds have been repaid and the account has largely been depleted.
Similarly, the Order alleges that Thornes converted approximately $2.5 million from the Scholarship Trust for the benefit of one of Thrones’ friends or his friend’s creditors. According to the Order, Thornes claimed the transfers were loans, but to date, none of the funds have been repaid and the account has largely been depleted.
According to the Order dated July 18, 2013, the Firm has agreed to be expelled from FINRA and Thornes has agreed to be barred from any association with any FINRA member in any capacity.