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FINRA Suspends Former High-Profile LPL Broker for Borrowing Money from Client

The Financial Industry Regulatory Authority has suspended and fined James Bashaw, a former LPL Financial broker, for borrowing approximately $200,000 from an LPL customer in 2013 without notifying the firm, a violation of FINRA rules.

The Financial Industry Regulatory Authority has suspended and fined James Bashaw, a former LPL Financial broker, for borrowing approximately $200,000 from an LPL customer in 2013.

Bashaw first became registered with FINRA in 1984, and in 2011, he was named a top adviser in Texas by Barron’s magazine, with $3.8 billion in total client assets. He spent 12 years at LPL prior to his termination in October 2014 for borrowing money from a client and allegedly participating in private securities transactions without obtaining written approval from the firm.

In 2016, Bashaw filed a $30 million FINRA arbitration claim against LPL and its president, Mark Casady, alleging misrepresentation, defamation, raiding, breach of fiduciary duty, and business interference. While his claims were denied by the FINRA panel, LPL was ordered to pay him $25,000 in legal fees.

FINRA claims that on three separate occasions in 2013, while registered with LPL, Bashaw accepted a total of $200,000 in loans from a longtime friend who was also an LPL customer whose account he serviced.

In his Brokercheck profile, Bashaw commented that LPL prevented him from fully satisfying his obligations to a “highly sophisticated long-time friend and LPL client that LPL itself injured with [its] strategic termination without just cause or notice.” Bashaw claims that “substantial ongoing payments” were made until LPL “destroyed” his business.

According to a letter of acceptance, waiver and consent issued by FINRA, when Bashaw filed a Chapter 11 bankruptcy petition in December 2017, he disclosed the debt as a “personal loan,” and the debt was included in the plan of reorganization approved by the court. Additionally, in annual compliance questionnaires completed in 2013 and 2014, Bashaw falsely told LPL that he had not borrowed any money from another individual.

FINRA suspended Bashaw from associating with any FINRA member in any capacity for a period of 4 months and issued a $5,000 fine. He is also required to requalify as a general securities representative by retaking and passing the Series 7 exam.

Bashaw, who had no previous disciplinary history with FINRA, accepted and signed the AWC letter without admitting or denying the findings.

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