Gerarld Fagnant, of Leominster, Massachusetts, a stockbroker with LPL Financial LLC, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member firm in any capacity after consenting to findings that he accepted unauthorized loans from frim customers, and made false statements on his firm’s compliance questionnaires regarding such. Letter of Acceptance, Waiver and Consent, No. 2015046376501 (Apr. 19, 2016).
According to the AWC, in December 2011, Fagnant was assigned as the registered representative for two customers, CA and JA, who opened brokerage accounts up with LPL Financial. Fagnant reportedly had discretionary authority over CA’s and JA’s jointly held account.
The AWC stated that $325,000.00 in the aggregate was loaned to Fagnant by CA and JA, where the loans (five in total) were provided between June 2013 through September 2014. CA and JA had reportedly taken $300,000.00 of the total lent to Fagnant from the brokerage account that the individuals held with LPL.
The AWC stated that in order for the funds to be lent, the customers practically depleted their brokerage account, where they liquidated an estimated $281,203 in securities in the process. After the funds were deposited into the customers’ bank account, which was held away from LPL, the customers wrote five checks against the bank account. Fagnant reportedly deposited the five checks from CA and JA in his account away from LPL.
The AWC further indicated that on September 2014, Fagnant signed a promissory note with CA, calling for Fagnant to pay three percent interest on the $325,000 over two years, with a final lump sum repayment of the entire principal on September 1, 2016. The AWC stated that the promissory note also called for the entire repayment of funds to be transmitted to CA in the event that Fagnant defaulted on scheduled interest payments. The AWC stated that Fagnant stopped making interest payments subsequent to February 2015. FINRA indicated that Fagnant ultimately failed to provide the principal payment as required.
According to the AWC, Fagnant falsely responded in LPL’s 2013 and 2014 compliance questionnaires regarding the loans. Particularly, Fagnant stated in the 2013 and 2014 questionnaires that he had not borrowed securities or money from another individual or entity. Fagnant also reportedly indicated in his 2014 questionnaire that he had no involvement in any promissory note.
FINRA found that Fagnant’s unauthorized borrowing of $325,000.00 from LPL’s customers was violative of FINRA Rules 2010 and 3240. FINRA also found that Fagnant’s aforementioned false representations within LPL’s compliance questionnaires was violative of FINRA Rules 2010.
Public disclosure records reveal that Fagnant has been subject of three disclosure incidents. On September 28, 2009, Fagnant settled a customer dispute for $8,299.37 for failing to add an insurance rider to a customer’s annuity product. On June 25, 2015, Fagnant became subject of a pending customer dispute, where customers are requesting $368,750.00 in damages in connection with allegations that Fagnant recommended the investment in a private promissory note which was never repaid.
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