by Pat Huddleston, Investor's Watchdog

Willie Sutton robbed banks — more than $2 million from roughly 100 banks between the late 1920s and his final arrest in 1952. To hear him tell it, though, Sutton had more in common with unscrupulous stockbrokers than he did with John Dillinger. More than a decade at the SEC and representing private investors against brokerage firms make the parallels plain to me. With help from the original Slick Willie himself, I hope to make them plain to you.

Schooled in His Trade

Early failures and incarceration convinced Sutton that he needed to know more about his chosen line of work. He sought out and received instruction at the knee of expert safe cracker “Doc” Tate.

Like Sutton, stockbrokers learn from the best. Their brokerage firms send them to sales classes. They receive training on how to make the initial approach to a prospective investor (don’t suggest a purchase on the first call. Instead, try to establish a relationship and ask the investor if he would like to hear about ‘sure things’ if they should come up). They receive training on how many pieces of information to give the investor when calling to make a sale (typically, three positive bullet points about the stock), and how to close the sale (create a sense of urgency). Finally, stockbrokers receive training on how to counter any objections the investor might raise to making the purchase (“You have to check with your wife? Who makes the decisions in your family? Trust me, she will thank you when you double your money, and you’ll never forgive yourself if you let this opportunity pass”).

Where the Money Is

When a New York Judge asked Sutton during a sentencing hearing why he robbed banks, Sutton replied, “Because, Your Honor, that’s where the money is.” While
Sutton began his career robbing jewelry stores, he quickly learned that banks held out the
greatest opportunity for reward.

Doctors, lawyers, professional athletes, widows, estates, and senior citizens are the banks for unscrupulous stockbrokers. Doctors and other busy professionals earn a good living and have liquid assets for investment. Widows and other family members grieving the loss of a family patriarch have money from the deceased’s estate and life insurance payments. Senior citizens have nest eggs accumulated over a lifetime of prudent saving. All are irresistible targets for the broker seeking to enrich himself at the expense of his client.

Not Threatening

Fond of expensive clothes, Sutton was described as being an immaculate dresser. Sutton had the reputation of a gentleman. People present at his robberies stated that he was quite polite. One victim said witnessing one of Sutton’s robberies was “like being at the movies, except the usher had a gun.” He took pride in never having used the Thompson submachine gun he typically took along.

On this point, Sutton has something in common with another notorious criminal. Describing Machine Gun Kelly in November 1932 shortly after Kelly robbed $38,000 from the Citizens State Bank in Tupelo, Mississippi, Chief Teller Homer Edgeworth said, “He was the kind of guy that, if you looked at him, you would never have thought he was a bank robber.”

The unscrupulous broker understands the importance of maintaining his client’s trust, even as he is breaking it. That trust is essential to his work. He will be polite, solicitous, and charming, giving his clients every reason to like him.

A Master of Disguise

In his autobiography, I, Willie Sutton, Sutton wrote:

That afternoon ‘Willie the Actor’ was born. Sutton went on to rob banks disguised as a postal telegraph messenger, a policeman, and a maintenance man.

The “open sesame” for stockbrokers is the sign on the door. The brokerage firms for which they work spend millions every year on television and print advertising designed to clothe their brokers in uniforms that will afford them easy access to the bank. Their efforts have worked. The vast majority of prospective clients I interview tell me that they trusted the name and national reputation of the firms for which their brokers worked. When I inquire as to why they trusted the firm, they seem embarrassed to say that they’ve seen the commercials on television and know that the firm has “been around for a long time.” What those clients do not know is the firm’s reputation among lawyers who represent investors. Every Wall Street wirehouse has had to pay investors for the misconduct of its brokers – some more often than others. The slickness of their advertising campaigns bears no relationship to their trustworthiness.

Well Prepared

Sutton exercised a devotion to casing a bank until he had its routine – and its weaknesses – down pat. Like any good salesman, a broker more interested in making himself money than in making his client money will seek to establish a personal relationship in order to build trust. Do you like sports? Do you have children the same age? Did you attend the same school? With a personal relationship comes trust. The broker cannot breach the investor’s trust unless he, 1) earns it, or 2) the investor gives it
away for free after seeing the uniform. He will know when you are out of town. He will know when you are tending to a family emergency. He will know when you are
busy at work, and he will capitalize on your distraction.

Quick on His Feet

Sentenced to life imprisonment as a fourth time offender and having escaped from two other prisons, including Sing Sing, Sutton was transferred to the Philadelphia County Prison in Homesburg, Pennsylvania. On February 10, 1947, Sutton and other prisoners dressed as prison guards carried two ladders across the prison yard to the wall after dark. When the prison’s searchlights hit him Sutton yelled, “It’s okay,” and no one stopped him.

Like Sutton, the unscrupulous stockbroker will have a plausible explanation when his client questions him about unusual activity. To the client who calls to complain about an unauthorized trade that appears on the monthly account statement, he might say “the back office mixed up some account numbers. That trade is not really in your account.” To the client complaining about excessive trading, the broker might say, “I’ve put my parents in this stock, and I’ll guarantee you against any losses.” He will explain an unauthorized change in account objectives from “safety of principal” to “speculation” as a “computer error.” In the most egregious cases, the broker will express disgust with the firm’s back office operations and offer to type out a “true” account statement. He will then deliver a phony statement disguising his misdeeds.

Never Say Die

On March 20, 1950, Willie “The Actor” Sutton was added to the FBI’s list of Ten Most Wanted Fugitives. Because of his love for expensive clothes, Sutton’s photograph was given to tailors as well as police departments. A 24-year-old tailor’s son recognized Sutton on the New York subway in February 1952 and followed him to a local gas station where Sutton purchased a battery for his car. The man reported the incident to the police who later arrested Sutton.

On Christmas Eve, 1969, 68-year-old Sutton was released from Attica State Prison. The following year Sutton did a television commercial to promote the New Britain, Connecticut, Bank and Trust Company’s new photo credit card program. Stockbrokers who have been caught red-handed abusing the trust of their customers often resurface at other brokerage firms.

How sure are you that you know your broker well enough to bet your retirement on it? The answer is important, because you are betting your retirement on it.