George A. Zedan of Glendale, California, a stockbroker with LPL Financial LLC, was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity per an Office of Hearing Officers’ Order Accepting Offer of Settlement containing allegations that Zedan converted customer funds and failed to cooperate in a FINRA investigation into Zedan’s misconduct. Department of Enforcement v. Zedan, No. 2013038377001 (July 13, 2016).
According to the Order, Zedan had misused or converted funds belonging to elderly customer, RH. Apparently, in 2000, RH became Zedan’s client while Zedan was registered at WM Financial Services, Inc. Subsequent to Zedan becoming employed with LPL Financial, RH transferred her assets to LPL Financial. The Order stated that RH eventually transferred all of her brokerage assets to be under the management of Zedan pursuant to his role at LPL. RH’s account was reportedly valued at $850,575.00 by July 31, 2012.
The Order reported that Zedan ultimately proposed to RH in 2011 through 2012 that Zedan and RH purchase property for purposes of renovating and selling the residential units. Zedan claimed that such business venture required that RH make the financial investment, while Zedan would be responsible for discovering the properties and agents, and otherwise managing affairs associated with the transactions.
RH, an eighty-seven-year-old individual, ultimately liquidated $306,183.00 worth of securities in her account pursuant to the real estate business opportunity with Zedan. Subsequently, RH apparently wrote a check to Zedan on August 30, 2012, to make the $300,000.00 real estate investment, which Zedan deposited in his Bank of America account just days later. Following the deposit of RH’s funds, Zedan never used such funds to buy residential real estate properties as discussed, nor did Zedan ever inquire into properties to bid on.
Unbeknownst to RH, Zedan purportedly converted RH’s funds for Zedan’s own personal use, using the funds to pay off credit cards and cover other expenses unassociated with Zedan’s business with RH. The Order indicated that Zedan’s payment of his credit cards, payment to cover premiums on Zedan’s insurance policy, and withdrawal of cash were made merely three days after he received RH’s funds.
According to the Complaint, Zedan persisted in spending nearly $17,000.00 of RH’s monies before a hold on Zedan’s account was eventually placed by Bank of America. Subsequently, Bank of America suspected that elder abuse was in play, and contacted authorities to investigate further. Apparently, RH told authorities that the funds were used for purposes of real estate business, in which RH was promised an eighteen percent return on investment. However, Zedan claimed to authorities that RH merely loaned the funds to Zedan under an agreement for Zedan to pay back RH over three years at a rate of six percent interest.
The Order then stated that Zedan failed to cooperate with authorities who wished to further question him regarding the transactions. The Glendale, California Police Department eventually filed a Complaint against Zedan, alleging theft from an elderly person as well as grand theft of personal property. FINRA found that Zedan’s aforementioned conduct constituted the improper use and conversion of RH’s funds, which was violative of FINRA Rules 2010 and 2150(a).
Prior to FINRA’s determination of Zedan’s violations, on February 13, 2014, FINRA personnel requested that Zedan provide information and documentation in connection with the allegations against him, per FINRA Rule 8210. FINRA alleged that Zedan wholly failed to respond to FINRA’s requests, which included information pertaining to banking and finance statements.
The Order further stated that FINRA made additional requests for Zedan to comply with FINRA’s requests. After the deadline imposed by FINRA’s second request, Zedan eventually but partially responded. Following a third request sent by FINRA on April 10, 2014, Zedan did not respond by the deadline.
Even after FINRA personnel eventually clarified with Zedan’s counsel the information that FINRA had requested, Zedan failed to produce the information and documentation. The Order stated that Zedan ultimately failed to produce the banking and credit account documents requested by FINRA based on additional requests, prompting FINRA to find Zedan in violation of FINRA Rules 2010 and 8210.
Public disclosure records reveal that Zedan has been subject to four disclosure incidents. On May 27, 2004, Zedan settled a customer dispute after a client alleged that he did not comprehend the products purchased, and was not in agreement with penalties associated with liquidating the account.
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