Securities Lawyers Blog
On September 11, 2014, FINRA, permanently barred Kenneth W. Schulz, a former broker of LPL Financial from associating with any FINRA member. According to the Letter of Acceptance, Waiver and Consent, in June 2013, Kenneth W. Schulz directed a registered assistant to impersonate six of Schulz’s former customers in phone calls to his prior firm requesting that the customers’ accounts be liquidated so that they could invest through Schulz at his new firm Commonwealth Financial network.
Schulz informed each of his customers that their securities holdings could be transferred “in kind” to accounts with Commonwealth. The customers agreed to transfer their securities to Commonwealth and authorized Schulz to initiate the transfers.
After the customers agreed to transfer the securities, Schulz learned that the customers’ securities could not be transferred in kind because the managed funds were proprietary to LPL Financial. Rather than inform his customers that the securities had to be liquidated before their funds could be transferred, Schulz had his assistant pretend to be the customers and had the accounts liquidated without customer consent.
As a result of Schulz’s conduct, FINRA barred him from the industry, finding that he failed to observe high standard of commercial honor and just and equitable principles of trade in violation of FINRA Rule 2010.
On July 30, 2014, FINRA sent Schulz a request for his on-the-record testimony. On August 7, 2014 Schulz refused to appear.
Schulz’s misconduct occurs often in the securities industry when a broker leaves one firm for another. It is important for investors to always ask questions of their financial advisor when transferring accounts. These questions should include questions about the broker’s compensation structure, whether he was terminated, whether the termination was a result of misconduct. The investor should also ask to see the broker’s CRD. A CRD, or a Central Registration Depository, is a system that tracks brokers licenses and any misconduct the broker may have committed.
These questions are important to a full and fair understanding of investment advisers.
Gana Weinstein LLP is currently investigating Kenneth W. Schulz, LPL Financial, LLC, and Commonwealth Financial Network. You should contact our firm if you or someone you know has been a victim of misconduct. We offer free consultations to determine whether a case exists and how strong that case is.