FINRA Sanctions Former LPL Financial Broker Marc Baldinger Over Private CMO I/O Strip Sales

shutterstock_160486019The Financial Industry Regulatory Authority (FINRA) recently sanctioned former LPL Financial LLC (LPL) broker Marc Baldinger (Baldinger) concerning allegations that between August 2010 and November 2012, Baldinger participated in private securities transactions (a/k/a “selling away”) without prior approval of LPL. In addition, FINRA alleged that in connection with these private securities transactions Baldinger failed to disclose his position as a managing partner of two limited liability companies.

Baldinger entered the securities industry on in 1989. Thereafter, from 2001 onward Baldinger was associated with LPL until Baldinger’s employment with LPL ended on November 24, 2012. On December 13, 2012, LPI, filed a Form U5 terminating Baldinger’s registration.

The FINRA rules require that all brokers report securities transactions to their employer. However, FINRA alleged that between August 19, 2010 and November 24, 2012, Baldinger introduced 20 customers to brokerage firms by the initials “RS” and “AFS” and purchased inverse strips of Government National Mortgage Association Interest Only bonds (GNMA I/Os). According to FINRA, the 20 clients invested a combined total of at least $12 million in GNMA I/Os. FINRA found that Baldinger received compensation for these investment recommendations of approximately $233,427.

In addition, FINRA found that on Baldinger established a series of limited partnerships to hold the client investments. December 10, 2004, Baldinger allegedly established Eventus, Ltd. And was the limited partner of the firm. FINRA alleged that Baldinger disclosed the existence of Eventus to LPL but did not disclose the other businesses engaged in by Eventus or his role in those businesses. FIRNA stated that Baldinger and his wife owned 100% of Eventus. Then on June 17, 2010, FINRA found that Baldinger established Ignorus, LLC, naming Eventus as the managing member and manager and Baldinger established Aegis Holdings, LLC with Ignorus being named as the managing member and manager. FINRA found that Aegis was established for the purpose of investing the funds of the 20 customers in the GNMA I/Os.

Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of selling away and unsuitable CMO I/O investments. I/O strip investments are high risk securities that are inappropriate for the majority of retail investors. Our consultations are free of charge and the firm is only compensated if you recover.