FINRA Bars Ex-LPL Broker Over Outside Business Activities

But in a lengthy broker comment included on that disclosure, Severance said he met the client discussed in the AWC letter and her now-late husband in 1996. Over the years, they “became much more than clients to me and my family,” he said, noting they “became dear friends.”

The client suffered from “severe” arthritis that “prevented her from completing basic household tasks, such as writing checks,” he claimed, adding that after her husband was diagnosed with cancer, Severance promised to “take care of” his wife after he died. That help wound up including assistance in paying her bills, shopping and charitable efforts, he said, noting that she insisted on paying him for his help. Severance said he started charging her a flat weekly fee of $100, which he did not consider a business activity. However, his broker-dealer learned what he was doing and informed him it considered that work undisclosed business activity and “terminated my association,” he said, expressing regret for not disclosing his activity to LPL.

Severance said he believed the state of Minnesota started investigating him over a “suspicious check written to a longterm caregiver” that he insisted he “did not write, nor was I aware of.” He has since stopped helping the client pay her bills and “transferred that task to her new power of attorney,” he said.

Other Details

Also this year, Severance was fined $5,000 by the Minnesota Department of Commerce for “breaching his fiduciary duty, demonstrating incompetence and/or financial irresponsibility in his dealings, and failing to observe high standards of commercial honor and just and equitable principles of trade in the services he provided to his seventy-one year old client, all in violation of Minnesota state law,” according to the AWC letter. Severance was also subjected to a six-month suspension that was stayed, the letter said, adding that stay will be lifted and the stayed portion of the suspension will become effective “if there is a determination that Severance has committed further violations of any law, rule, or order over which the Commissioner of Commerce has authority within two years.”

That wasn’t Severance’s first run-in with the Minnesota Department of Commerce. In the first of only two disclosures in his 37 years registered with FINRA, that state agency fined him $2,500 for failing to adequately disclose information involving changes to a customer’s portfolio and for marking trade confirmations as unsolicited when they were actually solicited, violating Minnesota statutes requiring him to observe high standards of commercial honor, according to the AWC letter.

— Check out A Broker Impersonated His Client … Twice. It Didn’t Go Well.