Regulators Sanction LPL Stockbroker For Fraud

James Cornelius Bylenga of Portage Michigan a stockbroker formerly employed by LPL Financial LLC is the subject of a Notice and Order to Cease and Desist issued by the State of Michigan Department of Licensing and Regulatory Affairs’ Corporations, Securities and Commercial Licensing Bureau based upon findings that Bylenga defrauded Michigan residents. In the Matter of James Bylenga (Aug. 22, 2019).

According to the Order, Bylenga was subject of an investigation by the Bureau which revealed that during the time that Bylenga was associated with LPL Financial, he withdrew $175,000.00 from an LPL customer’s account for his own benefit. The stockbroker allegedly contended that the withdrawals executed from the customer’s account were authorized. According to the customers; however, those withdrawals not only failed to be authorized, but there were no loan arrangements ever established for the benefit of Bylenga, and the customer’s funds had been procured through Bylenga’s fraudulent conduct.

The Bureau indicated that Bylenga’s withdrawals were unauthorized; and the stockbroker lied in an effort to persuade the Bureau that he obtained loans that were authorized by the customer. The Bureau determined that Bylenga engaged in fraudulent activities; conduct violative of Michigan Securities Act Section 502(1), MCL 451.2502.

This is not the first time that Bylenga has been sanctioned by a securities regulator. In particular, Bylenga has been barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity based upon consenting to findings that he failed to comply with FINRA during an investigation into allegations of his misappropriation or borrowing of customer funds. Letter of Acceptance, Waiver and Consent No. 2018060282201 (Apr. 5, 2019).

According to the AWC, in November of 2018, Bylenga was sent a letter from FINRA which compelled him under Rule 8210 to furnish documentation and information to the regulator about the circumstances surrounding his termination from LPL Financial LLC in October of 2018. Bylenga was terminated from LPL Financial during the time that he was internally investigated for his allegedly unauthorized receipt of customer funds. FINRA received a response to its request from Bylenga’s legal counsel who informed the regulator that the stockbroker would not cooperate. FINRA found Bylenga’s conduct violative of FINRA Rules 2010 and 8210.

Bylenga is referenced in a customer initiated investment related complaint which was settled on February 11, 2019 for $210,000.00 in damages based upon accusations of Bylenga’s receipt of customer funds disguised as loans.