The Texas State Securities Board has caught up with a former LPL advisor who was suspended indefinitely from the industry by FINRA in October.
The Texas regulator suspended Jason N. Anderson, a Beaumont investment advisor representative, for 90 days for charging unreasonable fees to clients, the regulator announced yesterday.
While registered with LPL, Anderson recommended an active equity-trading strategy to clients who had stated a preference for achieving investment growth with a moderate amount of risk. The strategy was based on an analysis of a stock's current price compared with its historical prices, the regulator said.
The Texas State Securities Board derided Anderson for not considering the trading costs associated with the strategy or the impact that the costs would have on the rate of return it would need to earn to generate a positive return for a client.
For one client, the costs were almost 30% of the value of the average equity securities in the client's account, according to the regulator.
The strategy would have had to generate extraordinary returns to offset the trading costs and commissions paid to Anderson for the "client just to break even," the regulator wrote in its order.
The Texas watchdog deemed the trading costs and commissions inequitable securities sales practices.
Anderson could not be reached for comment. His attorney, Kelli Smith of Texas law firm GERMER, did not return email and voice messages.
Anderson was suspended indefinitely by FINRA in October for failing to comply with an arbitration award or settlement agreement or to respond to a FINRA request for information concerning the status of compliance, according to his BrokerCheck report.
The suspension stemmed from non-compliance with a settlement agreement, which is not available publicly, a FINRA spokeswoman said.
In November 2016, two elderly clients filed a class-action lawsuit against LPL and Anderson alleging unauthorized trading, churning and mismanagement of client accounts from April 2007 to January 2016, according to court papers filed in Texas federal court.
It is not clear whether the case, which LPL asked to be pursued in arbitration, has been resolved.
Lauren Hoyt-Williams, a spokeswoman for LPL, did not return an email seeking comment.
Anderson was registered with LPL from April 2007 to February 2016, BrokerCheck records show. He was discharged from LPL in January 2016 for allegedly conducting discretionary trading in a brokerage account, according to a note on his BrokerCheck report.
Even though Anderson is theoretically suspended from the industry, the Texas State Securities Board granted his registration application with Financial Management Services of America, an SEC-registered investment advisor firm.
Robert Elder, a spokesman for the Texas State Securities Board, said the regulator does not discuss the rationale for registration decisions.