Former Kentucky LPL Financial Registered Representative Consents to FINRA Sanctions to Resolve Allegations of Unsuitable Recommendations and Falsifying RecordsWednesday, May 13, 2020
On May 6, 2020, the Financial Industry Regulatory Authority (FINRA) Department of Enforcement approved a Letter of Acceptance, Waiver and Consent (AWC) submitted by Donald Woods, a former general securities representative associated with Thurston Springer Financial in Louisville, Kentucky.
Woods’ FINRA BrokerCheck report reveals that he has worked with two FINRA member firms over the past ten years: LPL Financial LLC from July 2010 to January 2017 and Thurston Springer Financial (TSF) from December 2016 to August 2018. Both firms are located in Louisville, Kentucky.
FINRA alleges in the AWC that between June 2014 and June 2015, Woods submitted applications for real estate investment trusts (REITs) that inflated the customers’ liquid net worth in order to circumvent alternative investments restrictions. LPL prohibited registered representatives from recommending a certain percentage of their net worth in alternative investments, including REITs, and required that the customer’s age and investment profile be considered in all recommendations. In one example, LPL restricted one of Woods’ elderly customers holding in alternative investments to 10% of her liquid net worth. Even though Woods knew that this customer’s net worth was approximately $400,000, Woods allegedly inflated her net worth to $746,000 when submitting an application in an attempt to legitimize an application for $54,000 in a REIT. FINRA asserts that Woods recommendations for his clients to purchase REITs were inconsistent with their investment profiles and violated firm rules.
Based on the foregoing, Donald Woods violated FINRA Rules 2111 and 2010. Without admitting or denying the allegations made against him, Woods consented to a $10,000 fine and a six-month suspension from association with any FINRA member firm in all capacities for six months.
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