John-Aaron Lenhert of Laguna Niguel California a stockbroker formerly employed by Morgan Stanley has been fined $7,500.00 and suspended for five months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he engaged in unauthorized customer loan arrangements. Letter of Acceptance Waiver and Consent No. 2017053139401 (Oct. 10, 2018).
According to the AWC, between December of 2013 and September of 2015, the written supervisory procedures utilized by Morgan Stanley specifically disallowed stockbrokers such as Lenhert from engaging in lending arrangements with customers absent the customer being a part of the stockbroker’s immediate family.
Nevertheless, throughout that timeframe, Lenhert had borrowed $44,700.00 from three Morgan Stanley customers whose accounts Lenhert was responsible for servicing. Apparently, a sum of $29,700.00 of the borrowed funds came from customer RS between December of 2013 and May of 2013. Apparently, Lenhert promised RS that the money would be repaid with six percent interest. Evidently, Lenhert has yet to repay the customer.
$9,5000.00 was then borrowed by Lenhert from JG through a documented promissory note arrangement in which JG was promised repayment with a thirty-one percent interest rate. Another $5,500.00 had been borrowed by Lenhert from customer IM, who Lenhert had not fully repaid.
FINRA stated that Lenhert never sought or obtained authorization from the firm to borrow from the customers. Consequently, Lenhert’s borrowing arrangements were found by FINRA to be violative of FINRA Rules 2010 and 3240.
FINRA also stated that in 2015 and 2016, Lenhert had been issued questionnaires from Morgan Stanley which called upon Lenhert to indicate whether he lent money to, or borrowed money from, actual or potential customers of Morgan Stanley. Lenhert apparently stated that he had not borrowed customer funds in those questionnaires despite having borrowed money from customers RS, JG and IM. Moreover, Lenhert was questioned by the firm in December of 2016 regarding the possible loans. The firm was evidently told by Lenhert that his receipt of a loan originated prior to him commencing employment with Morgan Stanley, and that there were no promissory note arrangements that he was party to. FINRA found that Lenhert lied. Consequently, FINRA found Lenhert’s conduct violative of FINRA Rule 2010.
Lenhert was discharged from Morgan Stanley on January 12, 2017 based upon allegations that he violated the firm’s policy relating to financial transactions between the customers and employees. And on June 20, 2017, a customer filed an investment related complaint concerning Lenhert’s conduct where the customer requested compensatory damages supported by accusations that between 2012 and 2017, Lenhert borrowed the customer’s funds without providing the customer repayment.
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