Former LPL Financial Broker Walter Chao Fined And Suspended Over Private Securities Transactions

by Gray on October 14, 2015

in Uncategorized

 
The Financial Industry Regulatory Authority (FINRA) suspended California based broker Walter Rae Chao (Chao) for two years and fined him $30,000 for participating in unauthorized private transactions while he was employed with LPL Financial (LPL). Specifically, according to FINRA, Chao solicited investments from LPL clients to purchase interests in a Facebook special purchase vehicle (SPV), in order to purchase pre-initial public offering shares of the Facebook IPO.

15.10.14 facebook logo

Chao, who has been in the securities industry since 2003, was discharged from LPL in 2012 following allegations he violated firm policies and procedures related to his participation in private securities transactions without firm authorization. According to FINRA, Chao requested approval from LPL in 2011 to solicit his clients to invest in the SPV, LPL denied his request. Between February and May 2012, Chao solicited thirteen of his clients to invest into the SPV despite the fact that LPL denied his request. Nine of the thirteen clients he solicited participated in the transactions which reportedly generated a total of $1.27 million in investments.

Chao allegedly attempted to cover up these private transactions by using an unapproved email address to conduct the transactions, lying and providing misleading statements in his compliance questionnaire, and providing false and misleading information to FINRA regarding the transactions.

Selling away occurs when a broker or investment adviser sells an investment to a client that is not included in the client’s account or in the investment products that are offered by the firm. These private securities often include investments in private placements, private non-traded REITs, privately-held companies, limited partnerships, real estate and promissory notes. While all of these private securities can be real investments, they are sometimes used as a means for defrauding clients. – See more at: http://www.investorlawyers.net/investment-fraud-selling-away/#sthash.cmdeGLZS.dpuf

If you have suffered significant losses as a result of private securities transactions, you may have a valid securities arbitration claim. To find out more about your legal rights and options, contact a securities arbitration attorney at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

Previous post:

Next post: