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, including:
- 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.