Blake B. Richards, an ex-LPL Financial (LPLA) broker, must pay close to $2 million in penalties and disgorgement over allegations that he defrauded clients of close to $1.7 million. According to the case, submitted in the U.S. District Court of the Northern District of Georgia, Richards told at least seven clients to write checks to entities under his control. The clients thought that the money would be invested in variable annuities, fixed-income investments, or equities. Instead, contends the U.S. Securities and Exchange Commission, the funds were used to pay for his personal spending.
According to the SEC, most of the investors’ money came from life insurance proceeds or retirement savings. Two of the investors involved were widowed and at least two others were elderly customers.
Per the regulator’s complaint, Richards won one investor’s trust by delivering pain meds to her husband during a snowstorm. The spouse was suffering from terminal pancreatic cancer at the time.
Richards has not denied or admitted to the charges. The agency said that his actions indicate “selling away,” which involves brokers defrauding investors through external business activities.
LPL let Richards go last year after another adviser notified the brokerage firm about his alleged wrongful conduct involving non-firm accounts. The broker-dealer then conducted its own probe and notified regulators. Also last year, the Financial Industry Regulatory Authority barred Richards.
Elderly investors are a favorite target for fraudsters. According to a survey by the Investor Protection Trust, the American Bar Association, and the Investor Protection Institute, 34% of attorneys who took the poll said they either work with or expect to represent senior clients who have been victims of fraud. 27% reported dealing with the children of older fraud victims who either are trying to help their parents, who’ve been bilked, or the kids are the ones accused of exploiting them.
In an earlier survey, the Investor Protection Trust found that over 7.3 million Americans older than 65 had already sustained fraud losses. Earlier this month, the North American Securities Administrators Association set up the Committee on Senior Issues and Diminished Capacity. The panel, which is comprised of state securities regulators, will look more closely at elder financial abuse and the problems that can occur related to retirement nest eggs and complex financial securities. NASAA-compiled enforcement statistics indicate that 34% of actions in the last six years involved senior victims.
One reason for this is that the retirement population is growing, especially as people are living longer. However, a diminished mental capacity and the growing number of complex financial products can make for a bad combination. Many retirees may not be able to understand what they’re putting the retirement money into, and they can end up suffering huge losses.
The SEC has also expressed concern about how elderly investors continue to be targeted by fraudsters.
Contact our elder financial fraud lawyers today to request your free case consultation. Shepherd Smith Edwards and Kantas, LTD LLP also represents investors based abroad with securities claims against U.S. firms.
Ex-LPL broker ordered to pay $1.9 mln in U.S. SEC fraud suit, August 28, 2014
Senior investor concerns, abuse get more regulator attention, Investment News, April 19, 2014
More Blog Posts:
LPL Financial to Pay Illinois $2 Million Fine Related to Variable Annuity Exchanges, Stockbroker Fraud Blog, August 13, 2014
SEC Charges Ex-UBS Broker in $730K Elder Financial Fraud Ponzi Scam, Stockbroker Fraud Blog, August 4, 2014
LPL Financial Ordered to Pay $7.5M FINRA Fine Over E-Mail Failures, Institutional Investor Securities Blog, May 22, 2013