Jeffrey Allen Fanning, of West Palm Beach, Florida, a former chief executive officer of Liberty Partners Financial Services, LLC, has been charged by Financial Industry Regulatory Authority (FINRA) Department of Enforcement in a Complaint alleging that Fanning, inter alia, failed to supervise stockbrokers’ activities for excessive trading in customer accounts. Department of Enforcement v. Jeffrey Allen Fanning, No. 2015043246401 (Dec. 12, 2017).
According to the Complaint, from January of 2014 and September of 2015, Fanning was a fifty percent owner of the firm, serving as the firm’s financial and operations principal, chief financial officer and chief executive officer. Apparently, Fanning was responsible for reviewing all of the customer accounts and supervising equity trading for excessive activity. However, supervisory reviews were inconsistently performed by her.
The Complaint stated that Fanning’s supervisory failures caused accounts with possible excessive trading activities to be unmonitored for months after those transactions occurred, while in other circumstances Fanning conducted no review. Apparently, Fanning neglected to follow up or take action in reference to accounts that he discovered contained possible excessive trading.
The Complaint stated that once Fanning identified a customer was required to be presented with documentation for active trading to ascertain the customer’s consent to trading activities, he failed to make sure that the firm’s personnel submitted any documentation, and he neglected to make sure that the firm obtained the documentation from the customer.
The Complaint alleged that Fanning failed to speak with the customers that had accounts indicating that active trading was taking place, and those customers maintained 24 to 104 annual turnover ratios as well as 46 percent to 232 percent annual cost-to-equity ratios. Fanning reportedly imposed certain restrictions such as buy-blocks on accounts; however, this was done on no consistent basis. In one case, he relied upon a representative’s request rather than the required customer documentation to remove the buy-block. Further, when Fanning determined that restrictions on commissions had been proper, he merely notified the firm’s stockbroker that the stockbroker’s commissions should be restricted, failing to make sure that those restrictions were abided by.
FINRA Public Disclosure reveals that Fanning has been identified in three additional regulatory infractions as well as three customer initiated investment related disputes concerning accusations of his improper conduct while associated with Liberty Partners Financial Services, LLC.
Particularly, a customer initiated investment related arbitration claim relating to Fanning’s conduct was settled for $75,000.00 in damages supported by allegations that Fanning failed to supervise a stockbroker that executed faulty over-the-counter equity transactions. FINRA Arbitration No. 10-02746 (Aug. 4, 2011).
Then, a customer initiated investment related arbitration claim concerning Fanning’s activities was resolved for $161,055.77 in damages based upon allegations that the customer’s account assets were stolen. FINRA Arbitration No. 15-00613 (Mar. 2, 2016). Moreover, a customer initiated investment related arbitration claim pertaining to Fanning’s conduct has been resolved for $50,000.00 in damages based upon allegations that the customer’s investment portfolio was inappropriate managed, leading the customer to sustain equity losses. FINRA Arbitration No. 1600140 (Feb. 17, 2016).
Fanning’s registration with Liberty Partners Financial Services, LLC was terminated as of March 6, 2017.
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