FINRA’s Department of Enforcement investigated Schroeder and discovered various forms of misconduct and securities fraud. First, FINRA alleged that from June 2009 through March 2010, Schroeder recommended and sold $300,000 worth of convertible promissory notes in Titan Energy to several investors, including twelve of Wunderlich Securities’ customers. According to FINRA, Schroeder failed to give prior written notice or obtain prior written approval from Wunderlich Securities prior to engaging in these transactions in violation of NASD Conduct Rule 3040.
In addition to recommending investments in outside business endeavors, Schroeder also borrowed $10,000 from a Wunderlich Securities customer in violation of firm rules and FINRA Rule 3240(a). Finally, FINRA alleged Schroeder exercised discretion when he purchased securities in one of Wunderlich Securities’ customer’s accounts without receiving prior written discretionary authority from the customer.
Based upon the foregoing alleged misconduct, FINRA asserted Schroeder violated various federal and state securities laws, including FINRA Rules 2010 and 3240, as well as NASD Conduct Rules 2510(b) and 3040. For example, NASD Rule 2510 prohibits a registered representative from exercising any discretionary authority in a customer’s account unless such customer has provided prior written authorization and the account has been accepted by a FINRA member. Thus, a financial advisor must receive a client’s written authorization prior to executing trades in a customer’s non-discretionary account.
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 losses as a result of investing with Schroeder, or if you believe that you have been a victim of securities and investment fraud, please complete our contact form or contact one of our attorneys at (800) 627-2179.