Lyle Jude Boudreaux of Houston Texas a stockbroker formerly registered with Independent Financial Group has been issued a Consent Order by Texas State Securities Board in which Boudreaux’s investment adviser representative registration and securities agent registration in the state has been denied founded on allegations of Boudreaux making unsuitable recommendations to customers in the state of Texas when associated with Independent Financial Group. In the Matter of the Investment Adviser Representative and Agent Registration of Lyle Boudreaux Order No. REG20-DEN-05 (Dec. 1, 2020).
According to the Order, between February of 2016 and April of 2017, leveraged exchange traded funds had been purchased and sold by Boudreaux in the accounts of customers who depended on him for investment advice.
The regulator noted that leveraged exchange traded funds apply returns of an index through using financial derivatives. The investments are meant for speculation and taking advantage of short-term momentum of a given index. But these investments are costly and high risk according to the regulator, and are seldom used for investors who have long-term investment objectives. Leveraged ETFs are typically held for no more than a few days and are intended for investors who intend to trade on an active basis.
Customers’ accounts traded by Boudreaux contained large amounts of risky ETF positions. Those positions were held for extended periods resulting in losses to those customers.
The Order indicated that 18 customer accounts had been affected by Boudreaux’s trading. Those accounts were traded by Boudreaux on a discretionary basis. The Texas regulator noted that Boudreaux frequently bought and sold shares of ProShares Ultra VIX Short-Term Futures ETF (UVXY). The Order stated that this investment was meant for short-term use and necessitated frequent monitoring of the account by the investor. In one case, 850 UVXY shares were purchased for a customer’s account by Boudreaux at $40.00 a share. Those shares were held by the customer for 417 days, and the positions were sold for $12.94 a share. The regulator also showed that 1,250 shares were purchased for another investor’s account. That investor sold their positions for $9.20 per share 316 days after purchasing them.
Boudreaux’s purchases also exceeded customers’ risk tolerances according to Texas State Securities Board. The regulator noted that in one case, a 58-year-old customer who had a moderate risk tolerance held two accounts with the securities broker dealer valued at $578,799.93 in February of 2016. By April of 2017, $307,832.58 worth of shares in UVXY were purchased for that customer’s accounts because of Boudreaux. Shares were sold at a loss of $261,951.78.
FINRA Public Disclosure shows that Boudreaux has been identified in five customer initiated investment related disputes containing accusations of his misconduct while employed by Independent Financial Group. Boudreaux is referenced in a customer initiated investment related written complaint which was resolved for $80,000.00 in damages on May 5, 2017 based upon allegations of bad ETFs for the customer’s IFG account.
On November 30, 2018, another customer initiated investment related FINRA securities arbitration claim involving Boudreaux’s conduct was settled for $155,000.00 in damages founded on accusations that between 2015 and 2016, the customer invested in unsuitable leveraged exchange traded funds through Boudreaux at IFG. FINRA Arbitration No. 18-00378 (Feb. 9, 2018).
Boudreaux is also the subject of a customer initiated investment related FINRA securities arbitration claim which was resolved for $235,000.00 in damages supported by allegations of unsuitable exchange traded fund trades resulting in damages to the customer. FINRA Arbitration No. 19-03168 (Apr. 24, 2020).
Boudreaux was registered with Independent Financial Group between August 23, 2012 and January 31, 2020. He was registered with TCFG Wealth Management LLC between February 6, 2020 and July 23, 2020.
