Walter Rae Chao (CRD# 4665787) was fired by LPL Financial in September 2012 because the broker-dealer
claimed that Chao violated firm policies in regard to participation in
private securities transactions without disclosing to or getting approval from LPL.
FINRA claims that, between February and May 2012, Chao was involved in nine securities
transactions that he neither disclosed nor sought firm approval. According
to FINRA, these transactions totaled $1.27 million. To cover up this alleged
misconduct, FINRA says that Chao made a series of misrepresentations,
- Using an unapproved email address to conduct these transactions
- Lying and providing misleading statements on his compliance questionnaire
- Providing false and misleading statements to FINRA regarding the transactions
FINRA also accuses Chao of failure to provide adequate supervision, since
he was a branch manager with LPL’s San Mateo, California location
at the time of the alleged misconduct.
“Selling Away” Allegations
Back in 2011, it is alleged that Chao got word that another firm had created
special purpose vehicles (SPVs) to purchase Facebook shares. Chao was
allegedly interested in getting his customers to purchase these highly
anticipated shares, but in order to do so, securities industry regulations
required him to disclose these securities transactions to LPL and get
the firm’s approval before soliciting his customers. According to
FINRA, Chao failed to do so. This type of situation is often referred
to as “selling away” because it involves selling securities
away from the managing firm.
Learn more about selling away.
If you purchased interests in Facebook SPVs at Walter Chao’s recommendation,
we invite you to contact Meyer Wilson today. We will provide you with a
free review of your case so that you can learn your legal rights and options.