SEC Rejects Request to Remove Former LPL Rep’s FINRA Sanctions

The Securities and Exchange Commission announced that they rejected a request from a broker to alter a consent agreement made five years ago.

Sandeep Varma requested that the SEC remove from his public record a letter of acceptance, waiver and consent published in 2018, after a similar bid had been rejected by FINRA’s National Adjudicatory Council.

Varma entered into the AWC with FINRA on December 20, 2017. In doing so, he consented to the entry of findings that he violated FINRA Rules in presentations to customers about a “complex estate planning strategy” involving the use of a charitable remainder trust.

Among other things, FINRA had determined that Varma, while a registered representative with LPL in 2013 and 2014, gave four seminars to approximately 70 investors in which he promoted an investment strategy to avoid the payment of capital gains taxes on the sale of appreciated assets. FINRA found Varma’s presentation to be “oversimplified and misleading.”

In entering the AWC, FINRA says Varma also “specifically and voluntarily” waived various rights to which he would otherwise have been entitled under FINRA’s Code of Procedure, including the right to have a complaint issued specifying the allegations against him and to defend himself against those allegations in a disciplinary hearing. He further waived the right to appeal the AWC to FINRA, to the Commission, or to the courts.

Finally, Varma agreed that the AWC would become part of his permanent disciplinary record and would be made available through FINRA’s public disclosure program. Varma signed the AWC on December 20, 2017, and FINRA’s National Adjudicatory Council Review Subcommittee accepted the AWC on January 18, 2018, making it “final” on that date pursuant to FINRA Rules.

FINRA says that more than three years later, on January 29, 2021, Varma filed a “notice of appeal” with FINRA’s National Adjudicatory Council, requesting that the NAC conduct a “hearing” regarding the AWC. Among other things, Varma argued that he was “not seek[ing] to overturn the AWC,” but, rather, to remove references to it from FINRA’s CRD and BrokerCheck.

In Varma’s view, publication of information about the AWC does not “serv[e] the public interest, and serves only to perpetually “harm” him. A review subcommittee of the NAC dismissed Varma’s appeal, finding, in part, that the “NAC has no authority under FINRA rules to expunge an AWC from CRD.” His appeal to the SEC followed, which was rejected.

Varma is currently associated with Avantax.

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