Stoltmann Law Offices, P.C. is investigating recent reports that James T. Booth, of Norwalk, Connecticut, was terminated from LPL Financial on June 26, 2019 for stealing upwards of $1 million from his clients. On July 1, 2019, Booth consented to a lifetime ban from the securities industry after FINRA investigated information provided to it by LPL established that Booth converted – or stole – $1 million from clients by depositing the funds into personal accounts for his own use. According to the FINRA Acceptance Waiver and Consent (AWC), Booth committed these egregious acts from approximately April 2014 to May 2019. If you or someone you know was victimized by Booth, you should contact Stoltmann Law Offices to discuss your legal options.
According to FINRA, Booth’s spree occurred while he was registered with Invest Financial Corporation and then LPL Financial. Depending on when an investor’s funds were actually converted by Booth, either Investment Financial or LPL Financial could be held responsible for this misconduct. In almost every case where a financial advisor like Booth converts or steals client money, there are various red flags and compliance failures that facilitate the theft. For example, in some cases, financial advisors will arrange for transfers of funds from a client account to a third party account, like an LLC or some outside business, from which the advisor then steals the money. In other cases, the advisor asks the clients to write a check or wire funds to either the advisor to a company he owns. In any instance, the brokerage firm’s knowledge of what their agent is up to is a phone call away. Part of a compliance department’s responsibility to supervise their agents includes making contact with clients directly to make sure they are satisfied with how their accounts are being managed and to inquire with them about their experience. It does not take a brilliant compliance examiner to figure out that a broker has been stealing money from clients for upwards of five years, like Booth.
FINRA Rules and securities industry regulations require brokerage firms like Invest Financial and LPL Financial to supervise their financial advisors. The foundation for this obligation to supervise to found in the Securities Exchange Act of 1934 which states:
“The Commission, by order, shall censure, place limitations on . . ., suspend . . . or revoke the registration of any broker or dealer if it finds . . .that such broker or dealer . . . (E) has failed reasonably to supervise, with a view to preventing violations, another person who is subject to his supervision.” 15 U.S.C. § 78o(b)(4).
This obligation to supervise is a foundational element of securities brokerage firm duties and dates back to the founding of the Securities and Exchange Commission. FINRA has also adopted numerous rules and regulations which create legal obligations for brokerage firms to reasonably supervise their agents, including FINRA Rule 3110.
If you or someone you know is a victim of James Booth and his conversion of client funds, please contact Stoltmann Law Offices at 312-332-4200 for a free, no obligation consultation with an experienced securities attorney. Stoltmann Law Offices is a contingency fee firm, which means we do not get paid until you do!