When a spouse strips the assets

For 20 years, a married couple kept a joint investment account with a well-known brokerage firm. In addition to their investment portfolio, there were liquid funds in a checking account each could use for expenses. They didn't use this checking account as their primary checking account, but each from time to time wrote a check on the investment account for major expenses. 

Earlier this year, however, the wife discovered that her husband had been regularly writing checks made out to "cash" for thousands of dollars. During a 10-year period, her husband wrote checks for more than $350,000 made out to "cash."

The husband admitted that he used a significant portion of the funds to go to strip clubs. "He was pretending to go to work every day, when in fact he was either driving around waiting for the strip clubs to open, or spending the day in the clubs," his now ex-wife writes.

The couple divorced in June. 

You might guess that my reader's question might have to do with the ethics of a husband who spends joint funds on such endeavors. It's not. 

"Did our financial adviser have an ethical obligation to advise me about this activity?" she wants to know. 

The couple only met with their financial adviser -- the broker for their investment account -- once a year. 

Since her discovery, the wife decided to change brokers. When her former broker asked her why, she told him that she felt he should have given her a heads up about all the checks made out to "cash." She says that even a comment from him that they might want to restructure their investments to accommodate their new spending pattern would have sufficed. His response, she writes, was simply to say, "Oh." 

My reader has every right to be furious with her ex-husband for spending their joint account funds on personal expenses about which she apparently had no knowledge. 

But her beef is with her ex-husband, not her ex-broker. Unless he gave them advice that went against their instructions or if he failed to make note that they were living beyond their means when he assisted then in creating a financial plan, it was not his business to keep tabs on what they were using their checking account for. 

The checks her husband wrote were written over a decade. Both of their names were on the account and each had access to the funds. That her husband used the money for a purpose his wife found objectionable is clear, but that's an issue between the two of them. 

It's unfortunate that no red flags arose for my reader during the time her husband was spending their money on his extracurricular activities. But in a relationship presumably built on trust, it's not unusual that she would not have suspected such behavior. 

The right thing is for my reader to cast responsibility for her husband's behavior squarely on his shoulders. 

Jeffrey L. Seglin, author of The Right Thing: Conscience, Profit and Personal Responsibility in Today's Business, is an associate professor at Emerson College in Boston, where he teaches writing and ethics.

Do you have ethical questions that you need answered? Send them to rightthing@comcast.net. 

(c) 2011 JEFFREY L. SEGLIN. Distributed by Tribune Media Services, Inc.