Brian Lawrence Stephan of Xenia Ohio a stockbroker formerly registered with LPL Financial LLC has been fined $10,000.00 and suspended for eight months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity according to an Order Accepting Offer of Settlement based on findings that (1) Stephan gave the customer unsuitanble investment advice concerning the purchase of mutual fund investments and (2) Stephan mismarked a customers’ order ticket to make it appear as though the customer solicited transactions which the customer had not solicited. Department of Enforcement v. Brian Lawrence Stephan Disciplinary Proceeding No. 2014042022401 (Apr. 5, 2019).
According to the Order, during the time that Stephan was employed by LPL Financial LLC, he effected unsuitable investment transactions in the account of an elderly investor, TF. Evidently, TF was advised by Stephan to invest in twenty separate families of mutual funds by purchasing Class A shares. FINRA found that Stephan’s recommendations were unwarranted because it was possible for a discount to be applied on the mutual fund purchases had TF made the mutual fund purchases in fewer families of mutual funds. Indeed, FINRA indicated that if fewer fund families had been selected, TF’s costs could have been cut in half, saving her an estimated $30,000.00.
Additionally, the Order stated that Stephan advised TF to make purchases of mutual funds in amounts just below the point in which TF would have been entitled to a breakpoint discount. Apparently, half of TF’s investments were purchased in amounts that were merely $5,000.00 to $10,000.00 below the point in which a breakpoint discount would have been applied.
Ultimately, excessive sales charges had been incurred by TF because of the recommendations made by Stephan, which benefited Stephan through his higher commissions. FINRA found that Stephan did not possess an adequate foundation to conclude that his recommendations were appropriate; conduct violative of FINRA Rules 2010, 2111 and National Association of Securities Dealers (NASD) Rule 2310.
Additionally, FINRA concluded that ninety-five trades in TF’s account had been mismarked by Stephan. The Order stated that Stephan marked the customer’s common stock transactions as having been unsolicited when the transactions were indeed solicited. Moreover, Stephan reportedly lied on the mutual fund exchange forms utilized by LPL Financial LLC by claiming that transactions were executed because of the customers’ dissatisfaction with the returns on the customers’ initial investments. Supposedly, there were no complaints made by the customer in regard to those initial investments. FINRA noted that Stephan’s activities in this respect led the firm to maintain inaccuracies in its records and books. Consequently, FINRA found Stephan’s false statements and mismarking of TF’s order tickets to be violative of FINRA Rules 2010 and 4511.
FINRA Public Disclosure additionally reveals that Stephan is the subject of a customer initiated investment related written complaint in which the customer requested more than $5,000.00 in estimated damages supported by allegations that while Stephan was associated with LPL Financial, Stephan effected inappropriate transactions in the customer’s account and charged the customer excessive commissions.
Since December 1, 2017, Stephan has been registered with
American Wealth Management Inc.
