How a Broker defrauded customers for six years 

The Securities and Exchange Commission (SEC) has issued an announcement to inform for an administrative proceeding against an ex-LPL broker.

According the announcement, SEC bars Paul Lebel, an LPL broker from 2008 to 2014 for churning and excessively trading mutual funds in customer accounts and generating excess fees.

Paul Lebel was a registered representative of various broker-dealers for almost 13 years when he became associated as a registered representative with registered broker-dealer and investment adviser LPL Financial LLC (“LPL”) in August of 2008.

During his employment with LPL, Lebel defrauded four customers by churning several of their accounts. In particular, Lebel exercised de facto control over these customers’ accounts and excessively traded mutual fund shares which carry large front-end load fees (A shares). Lebel’s excessive trading was inconsistent with the customers’ investment objectives, and willfully disregarded the customers’ interest. Mutual fund A shares are designed for long-term, buy-and-hold investing and are unsuited for any known strategy involving frequent trading. From August 2008 through August 2014, Lebel executed numerous mutual fund A share trades that, in light of Lebel’s customers’ investment objectives, were fraudulent, made to the detriment of Lebel’s customers, and without justification other than the generation of commissions for Lebel.
The commissions paid to Lebel for those trades totaled $50,037.

As a result of the conduct described above, Lebel willfully violated Sections 17(a)(1) and 17(a)(3) of the Securities Act and Section 10(b) of the Exchange Act and Rules 10b- 5(a) and 10b-5(c) thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities.

Source: SEC

 

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