SEC Charges Ex-LPL Financial Adviser With Defrauding Investors of $2M

Blake Richards, a former LPL Financial LLC adviser, is now facing Securities and Exchange Commission charges for allegedly defrauding investors and misappropriating about $2 million from at least seven customers. Most of the funds that were misappropriated were life insurance proceeds from dead spouses and retirement funds. Last week, the regulator filed an emergency action asking a judge for a temporary restraining order, which was granted. Now, Richard’s assets have been frozen.

Per the SEC, Richards told investors to write checks to BMO Investments and Blake Richards Investments, which he controlled. They expected that he would put their money in variable annuities, fixed income assets, and common stock. Instead, contends the agency, none of these investments were ever executed and Richards allegedly took the money and used it for his personal spending.

The Commission is accusing Richards of violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC is also alleging Investment Advisers Act of 1940 and the Advisers Act violations.

The complaint refers to Richards as a marginal broker at LPL Financial. Noting that his production at the firm has been “virtually nonexistent” in the last few years, SEC says that his case is one involving “selling away,” with the broker using activities outside the firm to bilk clients. (Richards even allegedly brought pain medication to the husband of one client during a snowstorm to build trust).

Richards’ other misconduct allegedly included:

• Giving an investor a bogus statement on what was supposed to be LPL letterhead.
• Making a false statement to an investor that the latter had funds in a Jackson Life Insurance product.
• Giving an investor a business card that designated him as an AAMS. Richards is not an Accredited Asset Management Specialist.
• Making a false statement to LPL that he cleared investors’ funds via Goldman Sachs & Co.

An LPL spokesperson says that Richards was reported to the financial firm by another firm adviser. The brokerage firm fired the following day reported him to FINRA, the SEC, the FBI, and other authorities.

This is just one more indicator of allegedly poor supervision involving LPL Financial, which was not named in the complaint against Richards. Just last week, the financial firm was ordered to pay $7.5 million for nearly three dozen e-mail system failures. Also, Massachusetts regulators announced that instead of paying investors $2.2 million in restitution over the improper sale of nontraded real estate investment trusts, it would have to pay $4.8 million.

If you are an LPL investor who has suffered losses that you suspect may be a result of errors or negligence on the part of the firm or one of its brokers, please contact our securities fraud law firm right away.

SEC v. Richards (PDF)

SEC Charges Atlanta-Area Registered Representative and Registered Investment Adviser Representative with Securities Fraud, SEC, May 23, 2013

More Blog Posts:
LPL Financial Ordered to Pay $7.5M FINRA Fine Over E-Mail Failures, Institutional Investor Securities Blog, May 22, 2013
LPL Financial Continues to Stay on Regulators’ Radar, Stockbroker Fraud Blog, April 10, 2013
LPL Financial Ordered to Pay $100K for Lack of Adequate Oversight that Resulted in Unsuitable Investments for Clients, Stockbroker Fraud Blog, November 29, 2011