As a seasoned financial advisor and legal expert with over a decade of experience, I’ve seen my fair share of cases where investors have been wronged by unscrupulous advisors. The recent complaint against Leigh Allen, a financial advisor with LPL Financial in Battle Ground, Washington, is a prime example of the serious consequences that can result from unauthorized trades.
According to the complaint filed in August 2024, Ms. Allen allegedly forged a signature and made an unauthorized sale involving a variable annuity while representing LPL Financial. This type of misconduct is not only a breach of trust between the advisor and the client, but it also violates several FINRA rules designed to protect investors:
- FINRA Rule 3260 establishes specific conditions under which brokers may execute securities transactions without first consulting their client.
- FINRA Rule 2010 requires brokers to “observe high standards of commercial honor and just and equitable principles of trade.”
- FINRA Rule 2020 prohibits brokers from effecting transactions or inducing the purchase or sale of securities through manipulative, deceptive, or fraudulent means.
Brokers who engage in unauthorized trading may be held liable for damages and face disciplinary action from FINRA. This type of misconduct is particularly concerning because it erodes the trust that is essential to the advisor-client relationship and can have significant financial consequences for the affected investors.
The Advisor’s Background and Past Complaints
Leigh Allen has been in the securities industry for 15 years and is currently registered as a broker and investment advisor with LPL Financial, operating under the name Excell Wealth Partners. Prior to joining LPL Financial in 2017, she was registered with Wedbush Securities from 2009 to 2017.
Ms. Allen holds several securities industry qualifications, including the Series 7 (General Securities Representative Examination), SIE (Securities Industry Essentials Examination), and Series 66 (Uniform Combined State Law Examination). She is licensed to operate in Arizona, Oregon, Tennessee, Texas, and Washington.
It’s worth noting that the recent complaint against Ms. Allen is not her first. According to her FINRA BrokerCheck report, she has had one prior investor complaint, which is a red flag that investors should be aware of when considering working with her.
Understanding FINRA Rules and Unauthorized Trading
FINRA, or the Financial Industry Regulatory Authority, is a self-regulatory organization that oversees the activities of brokerage firms and their employees. The rules put in place by FINRA are designed to protect investors and maintain the integrity of the securities industry.
When a broker engages in unauthorized trading, they are essentially making decisions about a client’s investments without their explicit permission. This can include buying or selling securities, altering the composition of a portfolio, or making changes to a client’s investment strategy without first consulting them.
Unauthorized trading is a serious violation of FINRA rules because it deprives investors of the opportunity to make informed decisions about their own financial future. It can also result in significant losses if the trades are not in line with the client’s risk tolerance or investment objectives.
The Consequences of Unauthorized Trading and Lessons Learned
Advisors who engage in unauthorized trading can face severe consequences, including fines, suspensions, or even permanent barring from the securities industry. They may also be held liable for any losses incurred by their clients as a result of their misconduct.
For investors, the key takeaway is to always stay vigilant and engaged with your investments. Regularly review your account statements, ask questions if you don’t understand something, and never be afraid to speak up if you suspect that your advisor is acting without your permission.
As legendary investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” By staying informed and working with reputable advisors who prioritize transparency and communication, investors can minimize their risk and maximize their chances of achieving their financial goals.
It’s also important to remember that not all financial advisors are created equal. In fact, according to a study by the University of Chicago, roughly 7% of financial advisors have a history of misconduct. By thoroughly researching potential advisors and staying engaged with your investments, you can help protect yourself from falling victim to unethical practices like unauthorized trading.
