Fictional Episode
Selling Insurance on the Market
Two couples, one about to retire, were put into selling put options on stock indexes. They lost about $760,000. He made $279,000 in commissions.
About this episode: the broker in this story is fictional. The scheme, the numbers and the outcome are real and come from the public record linked at the end.
Names, places and dialogue are invented. Any resemblance to a real person is coincidental.
Scene One · The Couple Who Wanted to Retire
The Hendersons, as we'll call them, were about to retire. Their account paperwork said what they wanted: growth, with moderate risk. Their broker, call him Brad, had an idea he said would earn them steady income.
Scene Two · The Strategy
Brad had them sell put options on stock index funds they didn't own. Selling a put is like selling insurance on the market: you collect a small payment up front, and if the market falls past a certain point, you have to cover the loss. Most months it works. Then one month it doesn't, and the loss can wipe out years of small payments.
In the real case behind this episode, FINRA found the broker recommended this strategy to two married couples, traded their accounts without written permission, marked his own recommendations as the customers' “unsolicited” ideas, and texted customers on an unapproved messaging app the firm couldn't see.
Scene Three · The Bill
The first couple lost almost $400,000 on the puts and paid more than $62,000 in commissions. The second couple lost more than $360,000 and paid more than $217,000 in commissions. In all, the broker's commissions were more than $279,000.
Scene Four · The Ending
In July 2026 FINRA found the broker willfully violated Regulation Best Interest, the rule that requires a broker to put a customer's interest ahead of his own. He was suspended for 14 months and, because of his finances, not fined. He neither admitted nor denied the findings. FINRA's summary reports no restitution to the couples.
Sources
Every fact in this story comes from the public record. Read it for yourself:
A charge or complaint is an allegation, not a finding, unless we say a court, regulator or jury decided it.