Broker Barred After Hiding $25,000 Customer Loan From FINRA

Daniel Schmid, formerly with Northwestern Mutual Investment Services, LLC, agreed to a bar from the securities industry under a Letter of Acceptance, Waiver, and Consent (AWC) with FINRA. According to FINRA, Schmid borrowed $25,000 from a customer in July 2024 in violation of firm policy. He then gave FINRA false written responses and false testimony and withheld documents to conceal the loan and a related business venture. FINRA found that Schmid violated FINRA Rules 3240, 8210, and 2010. Schmid consented to FINRA's findings without admitting or denying them.

Schmid first registered with FINRA in August 2016 as an Investment Company and Variable Contracts Products Representative with Northwestern Mutual Investment Services, LLC. On November 1, 2024, Northwestern Mutual filed a Form U5 reporting that it allowed Schmid to resign "while under internal review related to replacement activity and disclosure of outside business activities." From December 2024 until July 2026, Schmid was registered with another FINRA member firm. He was not associated with any FINRA member firm at the time of the AWC, and the bar prevents him from working for one in any capacity.

FINRA Rule 3240 generally prohibits a broker from borrowing money from or lending money to a customer. The rule allows limited exceptions, such as loans from immediate family members or lending institutions, but only if the firm's written procedures permit them and, in most cases, the firm approves the arrangement in advance. FINRA Rule 8210 requires brokers to provide truthful information, documents, and testimony when FINRA requests them during an investigation. For example, a broker would violate Rule 3240 by borrowing money from a wealthy client to cover a personal tax bill without the firm's approval. A broker would violate Rule 8210 by telling FINRA investigators that a document does not exist when it does.

According to FINRA, Schmid borrowed $25,000 from a firm customer in July 2024 to finance a business venture. The promissory note required him to repay the money in 45 days with $2,500 in interest. Schmid did not seek Northwestern Mutual's approval, and the firm's policies prohibited the loan. He repaid it after three months. When FINRA asked about the loan and the venture in early 2025, Schmid allegedly denied in writing that he received the loan or took part in the venture. In response to a May 2025 document request, he allegedly withheld several documents that proved he received the loan. During on-the-record testimony in February 2026, Schmid initially repeated his false statements but eventually admitted receiving the loan, giving false written responses and false testimony, and withholding documents from FINRA.

Lufrano Law, LLC is a national investment litigation firm and has experience representing investors who have investment disputes with brokers and broker-dealers. Please contact us at (800) 627-2179 for more information if you have been the victim of investment negligence or fraud.

The content on this site reflects personal opinions and does not constitute statements of fact. No findings have been made against the firms or individuals mentioned. This blog is intended solely for educational purposes, drawing on publicly available information to provide general insights and a basic understanding of the law. It is not a substitute for legal advice.