Close Close

Regulation and Compliance > Federal Regulation > FINRA

Ex-LPL Rep Suspended for Making 22 Trades Without Written Consent

Your article was successfully shared with the contacts you provided.

What You Need to Know

  • A former LPL rep allegedly made the trades in three accounts with only verbal consent from the client.
  • He also falsely stated in three annual compliance questionnaires he had not exercised discretionary trading authority in any clients' accounts, FINRA said.
  • FINRA hit him with a $5,000 fine and a 10-day suspension.

The Financial Industry Regulatory Authority suspended a former LPL Financial broker for 10 days and fined him $5,000 for allegedly exercising discretionary trading authority when making 22 trades in a client’s three accounts without getting the client’s prior written authorization first, according to FINRA.

The unauthorized trades were made May 2018 through February 2020, while Michael Miles Hartlett was associated with LPL, the industry self-regulator said. He also falsely stated in three annual compliance questionnaires between 2018 and 2020 that he had not exercised discretionary trading authority in any clients’ brokerage accounts, according to FINRA.

Without admitting or denying FINRA’s findings, Hartlett signed a FINRA letter of acceptance, waiver and consent last week in which he consented to FINRA’s sanctions. FINRA signed the letter on Friday, bringing the dispute to a close.

Hartlett joined LPL in February 2018 as a rep and served as a broker and advisor for it before leaving the firm this month, according to his report on FINRA’s BrokerCheck website. The report did not specify why he left the firm and whether it was his decision or LPL’s. The AWC letter indicated he was still working for LPL when it was written.

LPL and Samuel E. Cohen, an attorney for law firm Marshall Dennehey Wamer Coleman & Goggin in Philadelphia, who represented Hartlett, did not immediately respond to requests for comment on Monday.

Verbal Agreement Not Enough

In May 2018, an LPL client opened three brokerage accounts at LPL with Hartlett as the assigned representative, according to the AWC letter. The client didn’t execute any documentation granting Hartlett discretionary trading authority in the accounts, the letter said, noting the client only orally granted Hartlett discretionary trading authority.

Hartlett didn’t disclose that grant of authority to LPL, according to the letter. As a result of his actions, Hartlett violated NASD Rule 2510(b) and FINRA Rules 3260(b) and 2010, according to FINRA.

He is now serving as a broker for International Assets Advisory and as an advisor for its affiliated International Assets Investment Management, according to his BrokerCheck report.

(Photo: Shutterstock)