Walter Chao of San Mateo, CA, a former general securities principal with LPL Financial, was dealt a 2 year suspension from associating with any FINRA member in any capacity, a $30,000 fine, and lost his FINRA certifications after accepting and consenting to FINRA findings alleging that Chao had sold away from LPL, provided misleading and false statements to FINRA, and failed to properly supervise staff. FINRA Letter of Acceptance, Waver and Consent, No. 2012034046301 (Aug. 17, 2015).
According to the AWC
From February-May of 2012, while Chao was associated with LPL, Chao had introduced 13 or more clients to a firm, referred to as “Firm A,” not associated with LPL in order to facilitate the purchase of Facebook special purchase vehicles designed to purchase pre-initial public offering shares of Facebook, Inc. Chao engaged in this conduct despite LPL denying his request to solicit his clients for the purchase of said Facebook SPVs.
The AWC further indicates that Chao attempted to conceal his part in the aforementioned transactions from LPL by utilizing unapproved e-mail communications with his clients that he never disclosed to LPL, while also lying in an LPL compliance questionnaire regarding his participation in the transactions. FINRA alleged Chao violated FINRA Rule 2010 and NASD Rule 3040 in this regard.
According to the AWC, FINRA, pursuant to Rule 8210, sought information from Chao based upon LPL’s allegations of Chao participating in the private securities transactions. Chao allegedly lied about how he introduced a client to Firm A for the purchase of Facebook investments. Chao allegedly told investigators he only introduced his clients to Firm A after they requested to invest and that he only provided clients with Firm A’s contact information – when FINRA alleged that Chao was actually soliciting his clients to purchase the investments from Firm A and was considerably more involved in the transaction than simply providing contact information. FINRA alleged that Chao violated FINRA Rules 2010 and 8210 in this regard.
Further, the AWC indicates that as the branch manager of LPL’s San Mateo, CA, office, Chao had failed to take reasonable steps to make sure his office had purged existing blank signed forms, stopped using them, and had stopped using e-mail addresses that were unapproved. FINRA alleged that Chao violated FINRA Rule 2010 and NASD Rule 3010 in this regard.
FINRA Public Disclosure Records
According to public disclosure records via FINRA’s BrokerCheck, LPL terminated Chao (via discharge) on August 30, 2012, after LPL claimed Chao violated firm policies and procedures regarding his participation in private securities transactions away from the firm without first obtaining authorization.
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, Esq., 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.