The Financial Industry Regulatory Authority (FINRA) recently announced Stephen J. Kaufman (Kaufman) entered into a Letter of Acceptance, Waiver and Consent without admitting or denying the allegations against him. The settlement concerns allegations Kaufman exercised discretion in his customers’ accounts without written authorization. As a result, Kaufman was suspended from the financial industry for twenty business days and ordered to pay a $5,000 fine.
Kaufman (FINRA CRD No. 2386637) is an associated person registered with FINRA since 1993. From 2011 to 2016, Kaufman worked for LPL Financial LLC (“LPL Financial”). Kaufman currently works for Vanderbilt Securities, LLC.
FINRA’s Department of Enforcement investigated Kaufman’s alleged misconduct and found he exercised discretion and unauthorized trades in 17 accounts belonging to 12 customers from 2011 to 2016. According to FINRA, Kaufman’s customers neither provided written authorization for his discretionary trading, and nor did LPL Financial approve the accounts for discretionary trading.
Based upon the foregoing misconduct, FINRA alleged Kaufman violated NASD Rule 2510(b), as well as FINRA Rule 2010. 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. In cases where a financial advisor executes unauthorized trades without proper authorization, the financial advisor and brokerage firm may be found liable for investment damage, as well as disciplined by securities regulators such as the case here.
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.