Ex-LPL Financial (LPLA) broker, Kerry L. Hoffman, is now facing fraud charges brought by the US Securities and Exchange Commission (SEC). Hoffman is accused of fraudulently selling $3.3M of unregistered securities, along with childhood friend Thomas V. Conwell, who is also a defendant in the civil case. The latter was barred by the regulator from the industry in 2000 after a separate $800K fraud that harmed 19 investors. Conwell pleaded guilty to criminal fraud charges against him and was sentenced to time in prison.
According to the SEC’s current complaint, the two men defrauded at least 46 investors in a dozen states by selling GT Media, Inc. securities to them. Hoffman was a registered LPL Financial broker during most of the time of the fraud, which allegedly took place between July 2015 and July 2018. He resigned from the firm in the wake of allegations that he served as consultant to GT Media without getting LPL’s approval or notifying the firm about these outside activities. He also was accused of helping a number of LPL clients and his own family members to invest in the company.
Hoffman allegedly offered and sold $350K of GT Media convertible promissory notes and $500K of the company’s stock to five advisory clients, making $50K in commissions. The Commission is accusing him of soliciting some of his advisory clients to invest in the unregistered securities but without letting them know that he had a conflict of interest. Not only was GT Media paying him compensation, but also the company was paying back money he had let it using investors’ money.
Hoffman is now a registered broker with Union Capital. With 34 years in the industry, he also was previously a representative for UBS Financial (UBS), Raymond James & Associates (RJF), First Union Securities, McDonald Investments Inc., Oppenheimer & Co. (OPY), Dean Witter Reynolds, and five other broker-dealers. It was Hoffman who recommended Conwell to GT Media as someone who could help sell the company’s stock.
The SEC alleges that Conwell sold about $2.5M of the unregistered GT Media stock to 41 investors. One of the ways in which he purportedly did this was to make a number of misrepresentations, including that:
- There were Fortune 500 companies that wanted to acquire GT Media.
- An IPO was expected soon.
- He was a co-investor in GT Media.
- The company was not paying him any money.
Conwell made $221,900 in commissions from the sales and allegedly misappropriated about $161,500 from about 16 investors, using the funds to cover his own expenses.
Other LPL Brokers in Trouble
Hoffman is not the only LPL broker to recently come under fire with regulators. The Financial Industry Regulatory Authority (FINRA) barred Former LPL broker Jason Nelson following allegations that he made misrepresentations about customer information related to the sale of annuities.
Also just barred was ex-LPL Financial broker Leslie Koonce after he allegedly did not disclose his participation in private securities sales.Last month, it was the firm that got in trouble after Massachusetts Secretary of the Commonwealth William Galvin ordered LPL Financial to pay a $1.1M fine for not registering hundreds of its brokers in the state.
Registered brokers are not supposed to engage in outside business activities nor are they supposed to work with individuals with previous criminal records or who have been barred from the industry. If Kerry Hoffman was ever your broker and you suspect your investment losses were due to fraud or negligence, contact our broker fraud lawyers today. If you believe any broker that represented you may have been a cause of your investment losses, contact Shepherd Smith Edwards and Kantas, LLP (SSEk Law Firm) today.