LPL Financial has been exonerated by the Financial Industry Regulatory Authority after a former LPL broker charged the firm with trying to raid his clients and ruin his career, a Finra arbitration panel announced recently.
James E. Bashaw, the founder of JEB & Co. of Houston who was named Barron's top advisor in Texas in 2011, was a broker with LPL until he was fired in 2014 after an audit that he claimed was rigged. He subsequently sued LPL and its then-CEO Mark Casady for $30 million in damages. The suit was sent by the court to Finra arbitration for settlement.
The three-person arbitration panel dismissed Bashaw’s complaint and his demand for damages. He filed Thursday to vacate the award, and claims discovery abuse by LPL.
The broker accused the firm of raiding his employees and stealing his clients, breaching its fiduciary duty, “tortious interference with business relationships,” defamation, negligent misrepresentation and intentional infliction of emotional distress. He claimed LPL tried to ruin his career.
LPL fired Bashaw for borrowing from a client, participating in private securities transactions without providing written disclosure or obtaining approval from LPL, and engaging in a business transaction that created a potential conflict of interest without receiving approval from the firm.
Bashaw is now employed by International Assets Advisory in Houston.
Although the demand for damages was denied, the arbitration panel ordered LPL to pay Bashaw $25,000 in legal fees because the firm failed to file papers demanded by the panel.