Adam S. Fritzsche, of Atlanta, Georgia, a stockbroker formerly registered with LPL Financial LLC, has been fined and suspended for one year from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he made unsuitable investment recommendations to customers and made misrepresentations on firm documentation concerning customers. Letter of Acceptance, Waiver and Consent, No. 2016049383801 (Feb. 10, 2017).
According to the AWC, in 2012, business development companies, which FINRA noted as illiquid and speculative alternative investments, had been pitched by Fritzsche to customers CH, LM, and SS – all of whom were retired individuals that had objectives to invest on a conservative basis. The AWC indicated that business development company investments were only appropriate for investors with long term investment horizons and no short-term liquidity needs.
The AWC stated that Fritzsche’s investment recommendations were inappropriate based upon the needs and financial circumstances which the customers had communicated to him. Further, the customers’ assets were reportedly overly concentrated in these business development companies as a result of Fritzsche’s recommendations. In one case which FINRA detailed, the investment of SS’s monies in Fritzsche’s recommended investments consisted of nearly eighty-six percent of SS’s net worth. Consequently, FINRA found that Fritzsche’s conduct was violative of FINRA Rule 2010 and 2111.
The AWC additionally stated that the customers’ net worth had been overstated on documents which Fritzsche submitted to LPL Financial on behalf of the customers. In so doing, Fritzsche reportedly tried to avoid restrictions imposed by LPL Financial which disallowed customer assets from being over-concentrated in alternative investments. FINRA stated that LPL Financial’s books and records were inaccurate because of Fritzsche’s conduct, resulting in Fritzsche’s violations of FINRA Rules 2010 and 4511.
Fritzsche’s registration with LPL Financial was terminated on December 14, 2012. Fritzsche was registered with Citizens Securities, Inc. from November 30, 2012 to June 28, 2016, and IFS Securities from October 18, 2016, to February 15, 2017.
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