FINRA SANCTIONS BROKER FOR UNDISCLOSED CUSTOMER LOAN

On behalf of Girard Bengali, APC on Monday, April 29, 2019.

The Financial Industry Regulatory Authority (FINRA) suspended a prominent broker who provided financial services in California and across the country. The suspension came after the man allegedly borrowed $200,000 from one of his customers in 2013 without informing his employer at the time, LPL Financial. The four-month suspension is only the latest step in an ongoing battle over his 2014 dismissal from his job. LPL Financial claimed at the time that the man failed to follow regulations as well as firm policies, stating that he told the company that he had not borrowed money from his customers on mandatory compliance questionnaires.

According to FINRA, the broker never repaid the loans from his customer. Instead, he filed for bankruptcy in December 2017 and included the debt as one of his personal loans. Because he filed for Chapter 11 bankruptcy, the outstanding debt was included in his reorganization plan, approved by a court in 2018. While the broker never confirmed or denied FINRA’s allegations, he was ordered to take an exam to requalify as a securities broker and pay a $5,000 fine. He later registered with another independent trading firm. 

When the broker was employed by LPL, he was one of the firm’s top associates. In fact, he was named the top financial adviser in Texas in 2011, managing $3.8 billion in assets. He was also responsible for directing around 24 financial advisers. He sued LPL after his termination, saying that the company falsified the audit of his offices in order to steal his clients.

Financial professionals may face a range of sanctions if accused of misconduct. These can range from a fine or a suspension to criminal prosecution. An attorney could work with a broker or other financial professionals to deal with these types of investigations and help to seek a favorable resolution.