Raymond Daniel Schmidt, a registered representative with LPL Financial, LLC, was permanently barred from association with any Financial Industry Regulatory Authority (FINRA) regulated broker-dealer in any capacity after consenting to findings that he engaged in prohibited customer loans, undisclosed outside business activities, made false statements to a FINRA broker-dealer, and failed to cooperate with regulators seeking information and documentation regarding his conduct. Letter of Acceptance, Waiver, and Consent, No. 2014042741201 (Mar. 25, 2015).
According to the AWC, from May 2009 – November 2012, Schmidt had borrowed $2,254,818.57 from seven of his firm’s customers in order to purchase real estate in Hawaii and construct vacation rental property on such properties. The AWC indicated that Schmidt’s firm did not approve of such procedures which allowed registered representatives to borrow funds from customers. FINRA found Schmidt’s conduct in this regard to have violated FINRA Rules 2010, 2340, and NASD rule 2370.
The AWC further indicated that in May of 2009, Schmidt was the sole owner/operator for the aforementioned Hawaii property and the business that he opened on May, 2012. Schmidt reportedly failed to notify his firm of this outside business activity.
FINRA, pursuant to FINRA Rule 3240 and NASD Rule 2370, has indicated that a registered representative may not borrow funds from his or her customer except in certain circumstances, and only then with the consent of the registered representative’s FINRA-regulated broker-dealer employer. Additionally, pursuant to FINRA Rule 3270 and NASD Rule 3030, registered representatives are prohibited from engaging in any business activity outside the scope of his or her employment without providing written notice to his or her FINRA-regulated broker-dealer employer.
Schmidt was also found to have violated FINRA Rule 2010, a rule which requires the registered person to observe high standards of commercial honor and just and equitable principles of trade, considering that when Schmidt had submitted five compliance questionnaires from 2009-2014, he denied borrowing funds from any firm client and failed to disclose the outside business activities. In 2013, according to the AWC, Schmidt had submitted false firm disclosures in which he claimed that two loans existed for the Hawaii real estate for purposes of constructing his personal residence. In another disclosure in 2013, he falsely claimed not to have any interest in the vacation rental property.
According to the AWC, Financial Industry Regulatory Authority requested, pursuant to Rule 8210, that Schmidt provide information and documentation regarding the aforementioned conduct in their investigation into his potential violations. The AWC indicated that Schmidt had not only failed to provide the information and documentation that was requested, but also indicated to FINRA’s Enforcement staff that he would not be cooperating with their investigation at any point. FINRA found Schmidt’s conduct in this regard to be in violation of Rule 2010 and 8210.
Public disclosure records via FINRA’s BrokerCheck reveal that Schmidt is subject to one pending customer dispute from 2014, in which a customer is seeking $375,000.00 in damages after alleging breach of fiduciary duty, breach of contract, constructive fraud, elder abuse, unfair business practices, violation of CA corporate law, sale of unregistered securities, and professional negligence.
Guiliano Law Group
If you have been the victim of securities fraud and you have a complaint, you should consult with an attorney. The practice of Nicholas J. Guiliano, Esquire, and The Guiliano Law Group, P.C., is limited to the representation of investors in claims for fraud in connection with the sale of securities, the sale or recommendation of excessively risky or unsuitable securities, breach of fiduciary duty, and the failure to supervise. We accept representation on a contingent fee basis, meaning there is no cost unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. For more information contact us at (877) SEC-ATTY.
