As a financial analyst and legal expert with over a decade of experience, I’ve seen my fair share of investor complaints and regulatory actions against financial advisors. The recent complaint filed against Wally Less, a Savannah, Georgia-based advisor with LPL Financial and SouthState Investment Services, is a serious matter that deserves attention from both the industry and the investing public.
The complaint, filed in May 2024, alleges that Mr. Less approved transactions that were not authorized by the account’s power-of-attorney, resulting in damages of $254,048. This type of alleged misconduct strikes at the heart of the trust that investors place in their financial advisors, and it’s crucial that such claims are thoroughly investigated and addressed.
The Seriousness of the Allegation and Its Impact on Investors
Unauthorized transactions are a grave violation of an advisor’s fiduciary duty to their clients. When an investor grants power-of-attorney to another individual, they are placing a tremendous amount of trust in that person to act in their best interests. If an advisor disregards this trust and approves transactions without proper authorization, it can lead to significant financial harm and undermine the investor’s financial goals.
The potential impact of such misconduct on investors cannot be overstated:
- Financial losses: Unauthorized transactions can result in substantial losses, as the complaint against Mr. Less demonstrates.
- Disruption of investment strategies: These transactions may deviate from the investor’s carefully crafted investment plan, throwing their portfolio off balance.
- Erosion of trust: When an advisor breaches their fiduciary duty, it can be difficult for the investor to trust financial professionals in the future.
The Advisor’s Background and Regulatory History
According to his BrokerCheck report, Wally Less has 17 years of experience in the securities industry and has been registered with LPL Financial since 2018, operating under the name SouthState Investment Services. Prior to joining LPL Financial, he was registered with Wells Fargo Clearing Services and several other firms.
While Mr. Less’s record shows no prior disclosures, the current complaint raises concerns about his adherence to regulatory standards and ethical practices. As Warren Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Understanding FINRA Rules and Unauthorized Transactions
The Financial Industry Regulatory Authority (FINRA) has clear rules in place to protect investors from unauthorized transactions. FINRA Rule 2010 requires brokers to observe high standards of commercial honor and just and equitable principles of trade, which includes obtaining proper authorization before executing transactions on behalf of clients.
When an advisor violates this rule, they not only harm their clients but also undermine the integrity of the financial markets. It’s worth noting that, according to a study by the University of Chicago, 7% of financial advisors have misconduct records, highlighting the importance of due diligence when selecting an advisor.
The Consequences and Lessons Learned
The consequences of unauthorized transactions can be severe for both the investor and the advisor. Investors may face financial losses and the emotional toll of having their trust betrayed, while advisors can face disciplinary action from regulators, lawsuits from clients, and irreparable damage to their professional reputation.
This case serves as a reminder to investors to:
- Regularly review account statements for any suspicious activity
- Maintain open communication with their advisors about investment goals and risk tolerance
- Thoroughly research potential advisors before entrusting them with their financial future
For advisors, this complaint underscores the importance of adhering to the highest ethical standards, maintaining meticulous records, and always prioritizing the best interests of their clients. By doing so, they can build long-lasting, trust-based relationships that benefit both their clients and their own careers.
As the regulatory process unfolds, I will continue to monitor this case and provide updates on its resolution. In the meantime, I encourage all investors to remain vigilant and proactive in managing their financial well-being.
