LPL purports to be “America’s No. 1 independent brokerage firm – with more than 17,601 registered representatives, based in 1,800 branch offices nationwide.”
From at least August 2007 through sometime in 2012, Walter Chao was the branch manager of a San Mateo office of LPL Financial.
According to FINRA
According to the Financial Industry Regulatory Authority or FINRA, while registered with LPL, Chao participated in nine private securities transactions totaling $1.27 million without LPL’s approval. According to FINRA, Chao attempted to conceal from LPL his participation in the private securities transactions by using an unapproved email address and providing false and misleading answers in a compliance questionnaire.
In addition, Chao, as a branch manager, failed to adequately supervise himself.
Chao Solicited Clients Against LPL’s Denial
Chao was aware that staff under his supervision were using blank signed forms and unapproved email addresses, but failed to take adequate steps to prevent it from occurring. In late 2011, Chao learned that a firm had created special purpose vehicles to purchase pre-initial public offering shares of Facebook, Inc. Individual investors could purchase ownership interests in the SPVs in order to participate in one of the most highly anticipated IPOs.
Chao wanted to solicit his customers to purchase interests in the Facebook SPVs but understood that he was required to get approval from LPL before doing so. Chao requested approval and LPL denied his request. Nevertheless, between February and May 2012, Chao solicited at least 13 clients to purchase interests in a Facebook.
Nine of those clients invested a total of $1.27 million in the Facebook SPVs.
Chao was terminated in August 2012.
Chao’s customers ought to consult with counsel to determine their legal rights.
Guiliano Law Group
Our practice 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 to 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.