Donald Richard Dahn (aka, “Rick” Dahn) was barred from associating with any FINRA member for borrowing money from bank customers to pay the operating expenses of a company Dahn ran with his brother. On October 14th, Donald Dahn submitted a Letter of Acceptance, Waiver and Consent (“AWC”), neither admitting nor denying FINRA’s findings but accepting and consenting to the sanctions, which FINRA accepted.
Between August 2009 and June 2010, while employed with LPL Financial Dahn allegedly borrowed $27,100 from public customers without the ability to repay the loans. According to LPL Financial, borrowing from customers is prohibited and Dahn did not disclose the loans to LPL. Based on FINRA’s findings, Donald Dahn borrowed $15,100 from one customer and $12,000 from a second customer. In violation of NASD Rule 2330 and more recently 2370, as well as, FINRA Rule 2150, FINRA Rule 3240, and FINRA Rule 2010.
Dahn Cited by FINRA in the Past
This is not the first time Donald R. Dahn has been cited by FINRA for undisclosed loans. In 2012, FINRA found that Dahn violated NASD Rules 2370 and 2110, as well as FINRA Rule 2010 and suspended him from association with any FINRA member for six months for borrowing a total of $240,000 from multiple customers while he was employed with Mutual Service Corporation (“MSC”) without notifying the member firm or obtaining authorization. According to FINRA, there has been six complaints against Dahn for undisclosed loans from customers.
Firm’s Duty to Supervise
LPL Financial and Mutual Service Corporation had an absolute duty to supervise Donald Dahn’s activities during the course of his registration or association with them as a licensed stockbroker. Accordingly, these firms can be held responsible for Donald R. Dahn’s conduct based upon the failure to supervise, and as a control pursuant to Section 20(a) of the Exchange Act of 1934, 15 U.S.C. § 78t.
Customers who have let Donald R. Dahn borrow money from their accounts ought to have their investment accounts reviewed by a professional to determine if they have been the victim of the fraud and may have the opportunity to seek recovery from LPL Financial or Mutual Service Coproation.
Guiliano Law Group
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