Securities Lawyers Blog
On March 10, 2014, Larry Steven Werbel submitted a Letter of Acceptance, agreeing to accept the sanctions handed down by the Financial Industry Regulatory Authority (FINRA) for alleged violations relating to the sale of penny stocks during his tenure at LPL Financial, LLC.
Larry Werbel entered the securities industry in 1976 as a Series 1, Registered Representative at Cigna Financial Advisors, Inc., where he was employed for twenty years. Thereafter, in February 2009, after a thirteen-year stint at FSC Securities Corporation, Werbel began working for LPL Financial, until his termination in February 2011.
During a three-week period, spanning from on or about October 26, 2010 through on or about November 17, 2010, while registered with LPL Financial, Werbel allegedly solicited eight customers to invest in QLotus Holdings Inc. (“QLTS”), a low-priced security that Werbel himself had previously purchased. According to FINRA, Werbel’s firm, LPL Financial, prohibited the solicitation of low-priced securities, such as QLTS, and so Werbel coded the QLTS sales as unsolicited despite the fact that they were all solicited. Werbel’s improper coding caused LPL’s books and records to be inaccurate in violation of NASD Rule 3110(a).
According to FINRA, Werbel disclosed the non-public personal information regarding the securities transactions of the eight customers who purchases QLTS in their accounts at LPL Financial. Werbel allegedly turned over this information to a non-affiliated third-party stock promoter to determine whether these customers were eligible to receive additional shares. As such, according to FINRA, Werbel violated FINRA Rule 2010.
By virtue of the information that Werbel provided to the third-party stock promoter, at least five customers received additional shares of QLTS through the mail. These private stock transactions (PST’s) were not recorded on the LPL Financial books and records. Werbel neither notified nor received permission from LPL Financial regarding these transactions. According to FINRA, Werbel was selling away, in violation of NASD Rule 3040. Werbel was also allegedly conducting similar transactions in Paradigm Oil and Gas, Inc. (“PDGO”).
As a consequence of his actions, Werbel was suspended for a two-month period from association with any FINRA registered broker-dealer. He was also fined $12,500. In accepting these sanctions, Werbel neither admitted nor denied the allegations made by FINRA, accepting and consenting solely for the purposes of this proceeding without an adjudication of any issue of law or fact.
The attorneys at Gana Weinstein LLP are experienced in handling cases involving the improper sales of penny stocks, selling away, and other broker misconduct. Call today to schedule of a free consultation.