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Regulatory Sanctions

Veteran Broker Chose to ‘Fall on His Sword’ in Dispute Over Customer Loan

June 18, 2019

by Howard Haykin


The 38-year brokerage industry career of an LPL Financial broker recently came to a crashing halt when, rather than hanging around to learn of his disciplinary fate over a disputed $175,000 customer loan, this broker forced the issue with FINRA. He refused to cooperate with an LPL Financial internal review and a subsequent FINRA investigation, leaving the regulator no choice but to bar him from the industry.



Prior to FINRA's sanction in April 2019 …

  • In August 2018, LPL Financial discharged this individual due to "[c]oncerns over [his] advisory fee structure."
  • In October, LPL filed an amended Form U5, reporting that it had initiated an internal review "to determine if [the broker] received loans from his client(s) while associated with the Firm." [This amended U5 filing prompted FINRA's investigation.]
  • In November 2018, the broker paid $210,000 to settle a customer dispute over the loans; customers had requested damages of $175,000.



What’s unfortunate about this case is that …

  • In the 1980s and 1990s, this individual was a model broker, obtaining 8 securities licenses - including 4 principal licenses (Series 8, 53, 27, 28).
  • In 1989, this broker, now 63, committed his first regulatory violation - involving prices of muni securities sold to customers. The case was settled for $3K.
  • Over the next 29 years, this broker had a spotless disciplinary record.



FINANCIALISH TAKE AWAYS.    We have no way of knowing the “whys and wherefores” of this case. Yet, I’d like to think, perhaps naively, that this broker had a viable option or opportunity to prolong his brokerage career. Unfortunately, I’m inclined to believe that this broker held little, if any, hope that he could hook up with another broker-dealer.


Some people say that individuals must accept the consequences - however harsh or severe - of their violative conduct. I, on the other hand, would like to see deserving individuals get some form of ‘wiggle room’ - a reward for 'time well served'
Many in this industry prey on unsophisticated and uninformed investors - and too often they seem to circulate with ease within the industry. Perhaps the time is right to offer some form of assistance for those who, throughout their careers, have conducted themselves in an ethical way.



This case was reported in FINRA Disciplinary Actions for June 2019.

For further details, click on...  FINRA AWC #2018060282201.