The Financial Industry Regulatory Authority has barred a former LPL Financial rep for participating in 74 private securities transactions and using unapproved devices — such as his personal phone — to conduct securities-related business.
According to FINRA's order, from March 2020 to January 2023, Derek Lee Copeland participated in the private securities transactions without providing prior written notice to LPL and exchanged over 2,250 communications with his LPL colleagues, LPL customers, other investors, and offering company partners using his private email addresses, text messages sent and received through his private mobile phone, and messages sent and received through online platforms.
"Copeland recommended the securities to 27 individuals, most of whom were LPL customers," the order states. "Collectively, the customers invested nearly $11 million in 19 securities to fund real estate development projects and investments in other businesses," and Copeland received at least $173,000 in compensation, including through management, consulting and recommendation fees.
During the same period, Copeland communicated about securities-related business — including securities offered through LPL and private securities transactions — using channels of communication prohibited by LPL.
LPL, therefore, did not preserve the communications as required, causing LPL to maintain incomplete books and records.
"These communications discussed securities-related business, including investments made on LPL’s platform and private securities investments outside of LPL," the order states. "Because these channels of communication were not approved electronic communications channels, LPL did not capture or maintain these communications, as required under the Exchange Act and FINRA Rules."
FINRA barred Copeland from associating with any FINRA member in all capacities.
During the time period, Copeland participated in 74 private securities transactions involving 19 securities.
"At all relevant times, LPL’s written supervisory procedures required registered representatives to provide written notice to, and receive written approval from, the firm before engaging in any private securities transactions," the order states. "LPL’s procedures further prohibited registered representatives from directing clients and nonclients to investments that were not approved by LPL."
Nonetheless, "Copeland did not notify or receive written approval from LPL before participating in the private securities transactions, which were outside the scope of his employment with the firm," the order states.
Moreover, "Copeland falsely attested on annual compliance attestations in 2020, 2021, and 2022 that he did not solicit clients or nonclients for involvement or investment in products that were not approved by LPL."
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