Subscribe to our mailing list

* indicates required







We seek to provide information, insights and direction that may enable the Financial Community to effectively and efficiently operate in a regulatory risk-free environment by curating content from all over the web.


Stay Informed with the latest fanancialish news.




Regulatory Sanctions

27 Error-Free Years in the Business, Then … Wham, You’re Outta Here!

January 17, 2019

by Howard Haykin


In 2013, a veteran registered representative with LPL Financial was charged with aiding and abetting a non-registered individual in the recommendation and sale of securities. His 8 months of alleged violative conduct effectively negated a ‘pristine’ long-term financial services career that began in 1986.
So, after being U5’d for cause by LPL and being sanctioned by FINRA, this individual’s career in financial services is seemingly over – notwithstanding his intervening association with a couple of FINRA member firms. As of January 2019, the registered rep has not been registered for nearly a year.
Seems like “The End” happened so quickly.



The registered representative (“LPL-RR”), while associated with LPL Financial, ”knowingly and substantially aided and abetted an individual in engaging in the recommendation and sale of securities at a time when the individual was not registered with FINRA, not associated with any FINRA member firm and not registered with the state of Utah, where both the individual and the customers resided.”



FINRA FINDINGS - WHAT WENT WRONG.    The violative conduct took place from March 2013 through October 2013 (the ''Relevant Period"). Let’s follow the chronology:


  • In March, an unregistered individual (“U-RR”) submitted to an insurance company requests on behalf of 3 investors to exchange variable annuities for fixed indexed annuities. The insurance company rejected the requests because the individual was not registered with FINRA at the time, which was necessary under Utah law to sell or make a recommendation to terminate a variable annuity contract.


  • At U-RR’s request, LPL-RR agreed to serve as the registered representative of record for the annuity exchanges and to split the commissions with U-RR - and to covertly pay those commissions to U-RR’s wife.


  • From March 2013 to October 2013, LPL-RR repeatedly facilitated U-RR’s efforts to continue acting as a securities broker by effecting 26 exchanges of variable annuities and 7 sales of mutual funds that U-RR recommended to his 13 customers to fund purchases of 33 fixed indexed annuities (collectively, the "Relevant Transactions").


  • In order to effect the transactions, LPL-RR falsely certified to LPL Financial on 10 suitability forms for 9 different customers that he had discussed the benefits and costs of the transactions with the customers identified on the forms.


  • LPL-RR also made false statements on forms submitted to the insurance company:
    • For 9 customers, 24 forms contained false certifications that he had discussed the appropriateness of the annuity replacement with the customers.
    • On 3 forms for 3 different customers, he falsely represented that he had met in person with the customer when he had not.
    • On 5 forms for 5 different customers that he had not met or spoken with, he misrepresented that he had known the customer for at least one or two months.



FINANCIALISH TAKE AWAYS.    In October 2013, LPL Financial filed Form U-5, discharging LPL-RR for having “submitted equity indexed annuity applications without meeting or discussing with clients, and violation of the firm’s document signature policy.”


FINRA followed with an investigation and concluded that, by his actions, LPL-RR had committed the following violations:

  • Aiding and Abetting Violations of the Registration Requirements of the Securities Exchange Act of 1934 (FINRA Rule 2010);
  • Causing the Firm to Maintain Inaccurate Books and Records (FINRA Rules 4511 and 2010); and,
  • Falsifying Documents in Connection with a Securities Transaction (FINRA Rule 2010).



This case was reported in FINRA Disciplinary Actions for June 2018.

For details the case, go to ...  FINRA Disciplinary Actions Online, and refer to Case #2013038124102.