Rogue Broker at Stephens Inc. Caused Penalty, $1.9M Claim

by George Waldon  on Monday, Feb. 17, 2014 12:00 am  

Stephens Building (Photo by Mauren Kennedy)

LaRue was sanctioned in October by both the ASD and the Financial Industry Regulatory Authority, the investment in-dustry’s self-regulating organization.

He was fined $10,000 each by the ASD and FINRA, and both agencies suspended his securities trading privileges for four months. The ASD suspension ends on Friday, and the fine is due by April 21. The four-month FINRA suspension ends March 3.

LaRue also is required to retake and pass the Series 7 and 63 or 66 exams to regain his stockbroker license.

After leaving Stephens, he worked in the Conway offices of Morgan Keegan & Co. and its acquirer, Raymond James & Associates, from September 2011 until his regulatory suspension in October.

LaRue has worked in the securities business almost continuously since he passed his Series 7 exam in March 1985 and started his career at A.G. Edwards & Sons.

When the new Stephens location in Conway opened in 2001, LaRue was described as a vice president and manager of the office.

Widespread Problem

Ultimately, Stephens wasn’t penalized by the ASD for lack of supervision regarding LaRue’s unauthorized trading. The ASD staff determined the company had sufficient policies in place and took action once it learned of the problem in September 2011, a month after LaRue left the firm.

However, the ASD staff did believe Stephens had to answer for allowing LaRue to buy and sell unsuitable investments, specifically the leveraged and inverse ETFs. (See What Are Leveraged and Inverse ETFs?)

“Stephens had no customer complaints about the sale of ETFs by Wayne LaRue, and ETF sales had nothing to do with LaRue’s departure from the firm,” said Frank Thomas, spokesman for Stephens Inc.

“Beyond that, we have no additional comment.”

The February 2012 complaint that resulted in the $475,000 arbitration settlement with Stephens was portrayed as a case of churning, in which LaRue made questionable trades to generate commissions at the expense of the client.

 

 

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