Arbitration

FINRA Disciplinary Action Against LPL Financial LLC Related to Broker Theft

Published on: September 20, 2023 | by Greco & Greco, P.C.

On July 25, 2023, the Financial Industry Regulatory Authority (FINRA) issued a Letter of Acceptance, Waiver, and Consent (AWC) against LPL Financial LLC, a prominent independent securities broker headquartered in Fort Mill, South Carolina. This disciplinary action followed a series of egregious violations that involved the conversion/theft of approximately $2.4 million of customer funds by two of the firm’s brokers.

Background

The AWC against LPL Financial LLC was the result of a failure to reasonably supervise the transmittal of customer funds, which enabled two firm registered representatives to convert substantial sums of money for their personal use. The findings by FINRA in the AWC are outlined below:

North Carolina Broker Christopher J. Carpenter barred by FINRA

Published on: August 25, 2023 | by Greco & Greco, P.C.

FINRA announced last month that it has barred Charlotte, North Carolina based financial advisor Christopher J. Carpenter. The FINRA Letter of Acceptance, Waiver, and Consent states that Mr. Carpenter failed to produce documents or information requested in response to a FINRA investigation.

The investigation allegedly was initiated in response to a Uniform Termination Notice for Securities Industry Registration (Form U5), reporting Carpenter’s discharge from his firm, LPL Financial. The Form U5 stated that LPL was reviewing Carpenter’s “alleged participation in unapproved real estate investments with customers.”

Mr. Carpenter’s FINRA Brokercheck report states that he was registered with LPL in Charlotte from 2020 to 2023, and prior to that he was registered with Spire Securities.

California Broker Chris Kennedy with Multiple Customer Complaints

Published on: June 16, 2023 | by Greco & Greco, P.C.

The online FINRA Brokercheck report for former Western International broker Chris Kennedy shows eleven different customer complaints. These complaints include allegations of unauthorized trading, unsuitability, breach of fiduciary duty, and other wrongful conduct. Many of the complaints have been settled, with one settled for over 2.7 million dollars.

The Brokercheck report also states that Western International discharged Mr. Kennedy in 2021 after allegations were made about unauthorized options trading.

Mr. Kennedy was registered with Western at a branch office in Woodland Hills, California and Tarzana, California.

Scott Jay Matalon Barred by FINRA

Published on: June 12, 2023 | by Greco & Greco, P.C.

Former RBC and Ameriprise securities broker Scott Jay Matalon of Jericho, New York was recently barred from the industry by FINRA, a securities regulator. The Letter of Acceptance, Waiver, and Consent states that Mr. Matalon failed to produce documents or information in response to an investigation regarding an arbitration Statement of Claim which was filed.

Mr. Matalon’s FINRA Brokercheck report lists a criminal charge, as well as a customer complaint seeking $2,500,000 in damages. The Brokercheck description of the customer complaint references allegations of conversion of funds from the now deceased customer.

Firms that employ securities salespersons can be held liable for the conversion (theft) of customer funds even if the firm claims that its supervisors were not aware of the theft. Please read here about broker theft and failure to supervise. If you were a victim of a financial advisor who stole funds from your accounts or investments, please contact our securities fraud lawyers for a free consultation about your case.

California Edward Jones Advisor Suspended for Customer Loans

Published on: March 28, 2023 | by Greco & Greco, P.C.

FINRA recently suspended an Edward Jones financial advisor from Sunset Beach, California for borrowing money from a customer without firm authorization. The FINRA Letter of Acceptance, Waiver and Consent against Scott P. Smith can be found here.

According to the AWC, Mr. Smith borrowed money in five different loans from a single customer without advising his firm about the loans. Loans from customers to stock brokers are generally prohibited unless they fall into several limited exceptions such as when the customer is a family member. The loans were allegedly discovered when the customer died and the estate raised questions about the loans. Mr. Smith subsequently resigned from Edward Jones while under investigation.

The FINRA AWC imposed a year suspension on the financial advisor, and a $10,000 fine.

New Jersey broker Craffy barred by FINRA

Published on: March 10, 2023 | by Greco & Greco, P.C.

New Jersey securities broker Carz Levinski Craffey (aka Caz Craffy) was recently barred from the securities industry by securities regulator FINRA. Mr. Craffy had been registered with Monmouth Capital Management and previously was registered with Newbridge Securities Corp.

Mr. Craffy’s Brokercheck report from FINRA discloses that he was discharged by Monmouth for failing to “disclose Outside Business Activity.” It also states that he has one customer complaint pending with allegations of negligence, fraud, breach of contract and breach of fiduciary duty.

The FINRA Letter of Acceptance, Waiver and Consent states that Mr. Craffy failed to appear to testify regarding his “potential conversion of customer money, loans or gifts from customers, active trading in customer accounts, and failure to fully disclose certain outside business activities.” He was barred from associating with any FINRA member in all capacities.

Western International Censured and Fined for non-traded REIT sales

Published on: February 10, 2023 | by Greco & Greco, P.C.

After being charged by the SEC with Regulation Best Interest violations relating to GWG, Western International Securities has now been censured and fined by FINRA for a different alternative investment product – non traded REITs.

REITs – Real Estate Investment Trusts – are investment companies that invest in a portfolio of various real estate properties. A non traded REIT is not traded on any exchange, and often is illiquid with no short term method of selling the investment.

FINRA charged Western with failing to implement and follow a reasonable supervisory system to ensure that REIT sales were suitable for the customers to whom they were recommended. Although Western had a REIT suitability form, they system did not require supervisors approving sales to review important suitability information from new account forms such as age, objectives, risk tolerance, income, etc.

Janney Montgomery Scott fined by FINRA for Oil and Gas MLP Concentration

Published on: January 12, 2023 | by Greco & Greco, P.C.

FINRA censured, fined, and ordered restitution payments from Philadelphia, Pennsylvania based Janney Montgomery Scott last month. The Letter of Acceptance Waiver and Consent (AWC) discussed how two of Janney’s advisors “recommended that 11 customers unsuitably concentrate their accounts in certain energy-sector securities, including master limited partnerships focused on the exploration or development of natural resources” in violation of the FINRA Suitability Rule, 2111. This subjected the customers to a high risk of loss if oil and gas prices declined.

The AWC discussed the fact that Janney’s supervisory system red flagged these concentrations, but Janney “failed to take reasonable steps to understand the potential risks and rewards.”

In addition to being censured by FINRA, Janney was fined $100,000 and ordered to pay restitution to the customers that had not yet received restitution in the total amount of $145,019.

J.P. Morgan Broker Edward Turley Barred from Industry by FINRA

Published on: November 21, 2022 | by Greco & Greco, P.C.

FINRA recently issued a Letter of Acceptance, Waiver, and Consent relating to J.P. Morgan broker Edward Turley from San Francisco, California that resulted in Mr. Turley being barred from the securities industry by FINRA.

The letter alleges that Mr. Turley has been registered with J.P. Morgan Securities LLC since 2009, and that he was terminated by J.P. Morgan in 2021 for “[l]oss of confidence concerning adherence to firm policies and brokerage order handling requirements.” According to FINRA, Mr. Turley has had five FINRA multi-million dollar arbitrations filed in 2020 – 2021 relating to allegations regarding sales practice violations and unsuitable trading. One of these resulted in an arbitration award.

Mr. Turley apparently refused to provide on the record testimony to FINRA in response to a Rule 8210 Request.

Anthony (Tony) Liddle of Oshkosh Wisconsin Barred by FINRA for Loans from Customers

Published on: August 25, 2022 | by Greco & Greco, P.C.

FINRA recently barred Oshkosh, Wisconsin broker Anthony (Tony) Liddle who was registered with Landolt Securities. The FINRA AWC states that it allegedly learned that Mr. Liddle had borrowed $1.8 million dollars from 13 customers, and that Mr. Liddle agreed to the FINRA bar. FINRA Rules and most state securities regulations generally ban securities advisors from borrowing from customers. Prior to Landolt Securities, Mr. Liddle was registered with Western International Securities in Wausau, Wisconsin.

Mr. Liddle’s FINRA Brokercheck states that Mr. Liddle was permitted to resign after allegations that he took GWG investment monies and deposited them in a Prosper Wealth Management Account. The Brokercheck further lists five customer complaints alleging the stealing of assets and issuance of promissory notes.

Greco & Greco has extensive experience representing customers of financial advisors across the country who steal funds and assets and/or borrow monies from customers. Please contact W. Scott Greco for a free attorney consultation if you believe you may be a victim of Mr. Liddle or other advisors who engaged in wrongful conduct.