Securities Lawyers Blog
According to records kept by The Financial Industry Regulatory Authority (FINRA) financial Broker Steven Blanchard (Blanchard), previously associated with LPL Financial LLC, has at least 2 disclosable events. These events include 2 tax liens, alleging that Blanchard recommended unsuitable investments in different investment products including debt securities among other allegations and complaints.
FINRA BrokerCheck shows a final customer complaint on January 06, 2025.
Respondent Blanchard failed to comply with an arbitration award or settlement agreement or to satisfactorily respond to a FINRA request to provide information concerning the status of compliance.
FINRA BrokerCheck shows a final customer complaint on December 23, 2024.
Without admitting or denying the findings, Blanchard consented to the sanctions and to the entry of findings that he submitted falsified documents to his member firm in connection with the firm’s investigation of a firm customer, who had a personal relationship with Blanchard. The findings stated that the investigation focused on whether the customer had submitted a fabricated offer of employment from the firm in support of a mortgage loan application. Blanchard produced the falsified documents to the firm to make it believe that he had hired the customer. These included an offer letter he fabricated and a purported email exchange he had with the customer using the firm’s email system. In fact, the emails had been fabricated and the firm’s email system had no record of the emails being sent to or from Blanchard’s email account. Blanchard also falsified an email exchange between his customer and the mortgage company, which he forwarded to the firm from his firm email account. The purpose of these emails was to make the firm believe he was not involved with the customer’s mortgage application and to give the appearance that his fabricated letter was provided to the mortgage company. The findings also stated that during FINRA’s investigation of this matter, Blanchard provided false information and documents in response to FINRA’s requests for information. In particular, Blanchard falsely represented to FINRA that his offer letter was genuine. In fact, as Blanchard knew, the offer letter had been fabricated. In addition, Blanchard produced to FINRA other fabricated documents, including documents purportedly showing that the customer had performed marketing services for the firm. In fact, those documents had been created after the firm began its internal investigation. Blanchard subsequently recanted and accepted responsibility for the false information and documents he provided to FINRA.
Under the securities laws brokers are obligated to act in their clients’ best interests and provide only suitable recommendations for investments to the client. In addition, the SEC has promulgated ‘Regulation Best Interest (Reg BI)‘ which according to the SEC enhanced the broker-dealer standard of conduct beyond existing suitability obligations and requires broker-dealers to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities. Regulation Best Interest and the fiduciary standard for investment advisers are drawn from key fiduciary principles that include an obligation to act in the retail investor’s best interest and not to place their own interests ahead of the investor’s interest.
Brokers have an obligation to first obtain and evaluate sufficient information about a retail investor to form a reasonable basis to believe the account recommendations are in the retail investor’s best interest. Recommendations cannot be based on materially inaccurate or incomplete information. Every recommendation’s cost and investor details are always part of material information. Types of costs that must be considered including account fees, commissions and transaction costs, tax considerations, as well as indirect costs.
In addition to obligation to understand the customer the broker must also investigate the product being sold. FINRA firms have an obligation to conduct a reasonable investigation of the issuer and the securities they recommend in offerings. A brokerage firm has a special relationship with a customer from the fact that in recommending the security, the broker represents to the customer that a reasonable investigation has been made. Accordingly, a brokerage firm may not rely blindly upon the issuer for information concerning a company in lieu of conducting its own reasonable investigation.
To protect investors, it should be required to mandate broker disclosures. Brokers are required to report events to FINRA, such as customer complaints, IRS tax liens, judgments, investigations, terminations, and even criminal matters, as shown on their BrokerCheck reports. FINRA has acknowledged that recent studies provide evidence of the predictability of future regulatory and customer complaint issues for brokers with a history of such events. FINRA’s Office of the Chief Economist (OCE) published a study showing the predictability of disciplinary and disclosure events based on past similar events. The OCE study showed that past disclosure events, including regulatory actions, customer arbitrations and litigations of brokers, have significant power to predict future investor harm. The data shows that where a member firm on-boards brokers with a significant history of misconduct there is a high likelihood that the broker will continue to engage in similar behavior.
Blanchard has been in the securities industry for more than 11 years. Blanchard has been registered as a Broker with LPL Financial LLC since 2023.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.
