The Financial Industry Regulatory Authority (FINRA) barred from the financial industry broker James Bracey (Bracey) concerning allegations that in or about February 2008, Bracey, received a $175,000 loan from a customer without notifying Multi-Financial, now known as Cetera Advisor Network LLC. FINRA alleged that on multiple occasions between 2009 and 2011, Bracey renegotiated the interest payments on the customer’s loan. FINRA also found that in December 2009, while associated with Multi-Financial, Bracey falsified a customer’s written wire transfer instructions in order to execute an unauthorized fund transfer from a customer’s brokerage account to that customer’s personal bank account outside of Multi-Financial. FINRA determined that Bracey caused the creation and maintenance of inaccurate books and records through the falsifying the customer’s wire transfer.
FINRA also alleged that between October 31, 2001 and April 30, 2012, Bracey failed to timely notify Multi-Financial, and later LPL Financial LLC, of two separate outside business activities. FINRA also found that in October 2004, after soliciting 17 investors to purchase securities away from Multi-Financial, Bracey failed to provide written notice to or firm approval to engage in private securities transactions in violation of NASD Rules 3040 and 2110. FINRA’s allegations are consistent with a “selling away” violation in which a broker solicits investors to invest in unapproved investments. Finally, FINRA found that between 2004 and 2012, Bracey willfully failed to timely disclose material information to Multi-Financial and LPL Financial in order to update his Form U4 concerning two liens and two creditor compromises.
In addition to the slew of violations alleged by FINRA, Bracey has been the subject of at least three customer complaints and terminated by three brokerage firms. The customer complaints against Bracey concern private placements (direct participation programs), equipment leasing investments, unsuitable investments, non-traded real estate investment trusts (REITs), and misrepresentations in the sale of securities.
LPL Financial and its brokers in particular have been sanctioned by regulators for failing to supervise their broker’s sales practices concerning alternative investments. On March 24, 2014, LPL Financial was fined $950,000 by the Financial Industry Regulatory Authority (FINRA) for failing to supervise the way that its brokers marketed and sold nontraditional investments, such as REITs. LPL Financial was alleged to have deficient supervision in the sale of alternative investment products, including REITs, oil and gas partnerships, business development companies (BDC’s), hedge funds, managed futures, and other illiquid pass through investments. FINRA found that from January 1, 2008, to July 1, 2012, LPL failed to adequately supervise the sales of theses alternative investments.