FINRA’s Department of Enforcement investigated Fagnant and alleged he borrowed funds from two customers from June 2013 to September 2014. FINRA alleged the customers loaned Fagnant a total of $325,000 on five separate occasions in June 2013, January 2014, May 2014, August 2014, and September 2014. A majority of the funds were derived from the customers’ brokerage account held with LPL and managed by Fagnant.
According to FINRA, Fagnant did not notify or receive approval from LPL prior to accepting the loans from the customers. Moreover, LPL’s written policies and procedures precluded Fagnant from accepting such loans except in limited circumstances that did not apply in this instance.
FINRA alleged Fagnant violated several FINRA rules and regulations, including FINRA Rules 2010 and 3240. FINRA Rule 3240 prohibits registered persons from borrowing money from or lending money to any customer certain conditions and/or exceptions are satisfied. A violation of FINRA Rule 3240 also constitutes a violation of FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principals of trade.
Lufrano Law, LLC is a national securities litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. If you suffered investment damages with Fagnant through LPL, you may be able to recover your losses through FINRA arbitration. Our firm only receives a fee if you recover money. Please complete the contact form below or contact one of our attorneys at (800) 627-2179 to schedule a free consultation or complete our free case evaluator.