FINRA Sanctions LPL Stockbroker Unsuitable REIT Sales
Donald Stephen Woods (also known as Don Stephan Woods) of Louisville Kentucky a stockbroker formerly registered with LPL Financial has been fined $10,000.00 and suspended for six months from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon findings that Woods provided unsuitable investment recommendations to customers and had submitted false information relating to customers’ investment transactions. Letter of Acceptance Waiver and Consent No. 2018058133301 (May 6, 2020).
According to the AWC, an eighty-four year old customer had been advised by Woods to purchase a real estate investment trust despite Woods failing to have an adequate basis to conclude that his advice was appropriate. FINRA stated that the stockbroker neglected to undertake adequate due diligence on the real estate investment trust risks prior to making recommendations. Woods acknowledged his lack of familiarity with the particular investment that he advised the customer to purchase. The AWC stated that he also neglected to consider that the real estate investment trust ran contrary to the customer’s liquidity needs.
Two more retired customers had been advised by Woods to allocate at least $200,000.00 in four real estate investment trusts. The AWC stated that the stockbroker lacked an adequate foundation to believe that his recommendations were appropriate because he did not take the appropriate steps to learn of investment risks and had disregarded the customers’ investment profiles. FINRA determined that Woods’ conduct was violative of FINRA Rules 2010 and 2111 in this regard.
FINRA also stated that Woods submitted false documentation to LPL Financial to effect customers’ investment purchases. The AWC stated that the net worth of his customers had been overstated on real estate investment trust applications so that LPL Financial’s suitability-based purchase restrictions could be circumvented. The AWC indicated that Woods knew that one of his customers had a liquid net worth of $400,000.00 even though the application that he submitted conveyed that the customer’s liquid net worth was $746,000.00. FINRA determined that Woods violated FINRA Rules 2010 and 4511 in this regard.
FINRA Public Disclosure reveals that Woods has been identified in eleven customer initiated investment related disputes containing allegations of his misconduct while employed by LPL Financial. On February 11, 2019, a customer filed an investment related complaint involving Woods’ conduct in which the customer requested $350,000.00 in damages based upon allegations that the customer had been placed into bad alternative investments including business development companies and real estate securities and that misrepresentations were made by the stockbroker in reference to those investments.
Woods is the subject of another customer initiated investment related arbitration claim in which the customer requested $140,000.00 in damages based upon allegations that the customers were steered by Woods towards investing in an unsuitable business development company, real estate investment trust and a variable annuity which generated losses for the customers. The claim also alleges that the customers’ purchases were induced by Woods’ misrepresentations and that his activities were not reasonably supervised by LPL Financial. FINRA Arbitration No. 19-02838 (Oct. 1, 2019).
Woods’s registration with LPL Financial has been terminated as of January 20, 2017. Between December 22, 2016 and August 15, 2018, Woods was registered with Thurston Springer Financial.