FINRA Suspends Ex-LPL Rep Over Risky REIT Investments

The claimants also said LPL "failed to adequately supervise" their representatives. The vast majority of the other disclosures involved claims of unsuitable investments made by Woods on behalf of his clients.

On or about June 11, 2014, Woods submitted an application on behalf of an elderly customer ("Customer A") to invest $54,000 in a REIT, according to the FINRA AWC letter. LPL's internal guidelines restricted Customer A's holdings in alternative investments, such as REITs, to 10% of her liquid net worth, FINRA noted. "To evade this restriction, Woods submitted an application that stated that Customer A's liquid net worth was $746,000 when, as Woods knew, her liquid net worth was approximately $400,000," the letter said.

Then, on or about May 21, 2015, Woods submitted applications on behalf of a retired husband and wife ("Customers B and C") to buy shares in four REITs totaling $200,000, according to FINRA. Those forms stated that Customers B and C had a combined liquid net worth of about $700,000, the letter noted, adding LPL's guidelines restricted Customer B and C's holdings in alternative investments, including REITs, to 25% of their liquid net worth. "To circumvent this restriction, Woods submitted revised applications on or around June 4, 2015 that stated that Customer B and C's liquid net worth was $900,000 when, as Woods knew," it was $200,000 less than that, the letter said.

Based on his actions, Woods violated FINRA Rules 2010 (governing standards of commercial honor and principles of trade), 2111 (governing the suitability of securities transactions and investment strategies) and 4511 (governing general requirements for books and records), according to FINRA.

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