Southwest Securities Stockbroker Charged With Securities Fraud
Wade Lawrence, of Dallas, Texas, a stockbroker formerly registered with Southwest Securities, Inc., was charged by The United States Securities and Exchange Commission (SEC) in a Complaint alleging that Lawrence defrauded customers and breached his fiduciary obligations by way of Lawrence’s unauthorized trades and misrepresentations. Securities and Exchange Commission v. Wade James Lawrence, Case No. 3:16-cv-426 (N.D. Tex. Feb. 16, 2016).
According to the Complaint, from 2010 through 2013, at a time when Lawrence was registered with two SEC registered investment advisers and broker-dealers, he committed fraud and breached his fiduciary obligations to an estimated eighteen customers through effecting unauthorized trades in customer accounts, and making a myriad of misrepresentations. The SEC alleged in the Complaint that customers of Lawrence suffered a minimum of $2,000,000.00 in losses, while Lawrence generated advisory fees estimated at $28,700.00.
The Complaint further alleged Lawrence of accumulating no less than $480,000.00 from five customers after they were falsely informed by Lawrence that their funds would be utilized for securities trading. Apparently, most of the affected customers’ funds were utilized for Lawrence’s own personal gain rather than for the benefit of his customers, while an estimated $50,000.00 was paid to customers through a Ponzi-scheme based approach. The SEC alleged that Lawrence’s conduct was violative of Securities Exchange Act of 1934 Section 10(b), SEC Rule 10b-5, Securities Act of 1933 Section 17(a), and Investment Advisers Act of 1940 Section 206(1) and 206(2).
FINRA Public Disclosure reveals that Lawrence has been subject to fourteen customer initiated investment related arbitration claim. Specifically, on April 6, 2015, Lawrence was named in a customer initiated investment related arbitration claim in which the customer requested $15,000.00 in damages based upon allegations that Lawrence breached his contractual duties to the customer, effected unauthorized and unsuitable trades, and defrauded the customer.
On January 9, 2015, Lawrence settled a customer initiated investment related arbitration claim for $15,000.00 based upon allegations that Lawrence effected unsuitable and unauthorized transactions, committed negligence, made misrepresentations to the customer concerning investments, and breached his fiduciary and contractual duties.
On December 9, 2014, Lawrence became subject to a pending a customer initiated investment related arbitration claim in which the customer requested $100,000.00 in damages based upon allegations of gross negligence, misrepresentation, and fraud. The customer alleged that Lawrence induced the customer to effect a wire transfer to fund an investment, where such funds went directly into Lawrence’s own personal banking account instead.
On November 17, 2014, Lawrence settled a customer initiated investment related arbitration claim for $50,000.00 in damages based upon allegations that Lawrence made unsuitable investment recommendations, breached his contractual and fiduciary duties, made misrepresentations concerning investments, and that his firm failed to supervise Lawrence.
On October 27, 2014, a customer was awarded $188,198.00 in damages in an investment related arbitration action based upon allegations that Lawrence effected unauthorized trades, made unsuitable investment recommendations, breached his contract, and that his firm failed to supervise Lawrence. On October 21, 2014, a customer was awarded $252,500.00 in damages in a customer initiated investment related arbitration claim based upon allegations that Lawrence committed negligence, made misrepresentations to the customer concerning investments, and violated Securities Act of 1933, and Sections 33(A)(2) and 33(F)(1) of the Texas Securities Act.
On January 8, 2014, Lawrence was permanently barred from associating with any Financial Industry Regulatory Authority (FINRA) member in any capacity after Lawrence consented to findings that he obstructed a FINRA investigation into allegations that Lawrence misappropriated funds from customers. Letter of Acceptance, Waiver and Consent, No. 2013039289901 (Jan. 8, 2014).
According to the AWC, on December 4, 2013, Lawrence was sent a request from FINRA for him to provide recorded testimony on December 18, 2013, in connection with FINRA’s investigation into the misappropriation allegations. Apparently, Lawrence’s counsel contacted FINRA personnel to inform them that Lawrence would not be cooperating. FINRA found that Lawrence’s absence from testifying was violative of FINRA Rule 8210.
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