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Feb 14 2017

FINRA Suspends Former LPL Broker for Unsuitable BDC Sales

The Financial Industry Regulatory Authority suspended a former LPL Financial broker for one year for allegedly engaging in unsuitable non-traded BDC sales and overstating the net worth of three customers, according to a letter of acceptance, waiver and consent issued by the regulators.

According to FINRA, BDCs are long-term investments for persons of adequate financial means who have no need for liquidity. The regulators allege that Adam Fritzsche made unsuitable recommendations to three retired customers that were inconsistent with their conservative investment objectives and resulted in overconcentration of their liquid net worth in an alternative investment.

For example, one 81-year-old client had approximately 86 percent of her liquid net worth invested in a BDC. FINRA says that Fritzsche attempted to circumvent LPL’s procedures, which prohibited over-concentrating customers’ liquid net worth in alternative investments, by overstating the net worth of three clients on forms he submitted to LPL.



FINRA suspended Fritzsche from associating with any FINRA member for one year, however, no monetary sanctions were imposed due to his financial status and inability to pay.

Fritzsche, who is currently registered with IFS Securities, does not have any relevant formal disciplinary history with the Securities and Exchange Commission, any self-regulatory organization or any state securities regulator. He accepted and signed the AWC letter without admitting or denying the findings.

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Article by: The DI Wire


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