Maureen Sloan, 63, of Newport Beach, Calif., claims former LPL Financial L.L.C. broker Alberto Neira stole $4.5 million from her through a fraudulent auto-financing scheme called Silver Oak Leasing. Ms. Sloan said she lost another $4 million in unsuitable trading of preferred stock. Ms. Sloan is the granddaughter of Walter Knott, founder of the Buena Park, Calif.-based Knott’s Berry Farm.
Mr. Neira appears to have been associated with LPL Financial L.L.C. since February 2002.
LPL Financial LLC terminated Mr. Neira in January 2011 for “failure to fully disclose participation in outside business activity and selling away in violation of firm policies,” according to FINRA regulatory records. However, it appears that Neira did disclosed that he was a shareholder or partner of Silver Oak Leasing since at least 2006.
FINRA Barred Neira
Last November, FINRA barred Mr. Neira from the industry after he failed to respond to FINRA’s request for information regarding $2 million in Silver Oak investments made by 14 LPL clients. FINRA said Mr. Neira failed to disclose that he was a paid director of Silver Oak, rather than just a passive investor, as he had claimed.
Prior to this arbitration and his association with LPL Financial LLC, it appears that Mr. Neira was also the subject of at least two other investment related customer initiated claims alleging fraud in connection with the sale of securities.
This matter is particularly interesting because it appears that Mr. Neira was able to remove $4 million from the customer’s account by borrowing these funds on margin and then sending the proceeds to Silver Oak in which he disclosed he had an interest.
FINRA Conduct Rule 3010, specifically provides that:
Each member shall establish and maintain a system to supervise the activities of each registered representative and associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with the Rules of this Association. Final responsibility for proper supervision shall rest with the member.
NASD Issues Notice
In June 1999, the NASD issued Notice to Members 99-45, offering specific guidance as to the types of activities a member must review that occur at each of its offices, and again recognizing that:
Some associated persons working in these unregistered offices may be involved in other business enterprises, such as insurance, real estate sales, accounting, tax planning, or investment advisory services, and consequently may be classified for compensation purposes as part-time employees or independent contractors. Some unregistered offices also operate as separate business entities under names other than those of the members.
While the NASD does not encourage or discourage such arrangements, a large number of geographically diverse offices presents the potential that sales practice problems will not be as quickly identified as in larger, centralized branch offices. This increased potential must be taken into account when drafting supervisory procedures.
NASD issued Notice to Members 99-45 at 296 (June 1999); See also, Sarah B. Estes, Supervision of Independent Broker Dealers: From Royal Alliance to NTM 99-45, North American Securities Administrator Assoc., Enforcement Law Reporter (2000)(supervision of non-traditional broker-dealer network offices).
Here, but for the failure to supervise Mr. Neira by LPL Financial LLC, Ms. Sloan’s losses and Neira’s fraudulent conduct may have been prevented.
Accordingly victims of Mr. Neira may have claims against LPL Financial LLC. based upon, among other things, its failure to supervise Mr. Neira.
Guiliano Law Group
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 to unless we make a recovery for you, and there is never any charge for a consultation or an evaluation of your claim. If you own the common stock of TradeStation and purchased your shares before April 21, 2011, and wish to learn more about these claims, contact us at (877) SEC-ATTY