LPL Financial Gets Off Light For Egregious Behavior Of Broker
The Oregon Division of Financial and Corporate Securities fined LPL Financial Corporation $100,000 for failing to adequately supervise one of its brokers, according to Investment News. The broker, Jack Kleck, was also the Branch manager of the LPL Financial office in LaGrande, Oregon. Kleck had a book of business that included many elderly investors who were in their 70's or 80's, in poor health and incapable of making sound investment decisions. Some of these investors had been clients of Kleck for several decades and he was aware of the fact that his clients' health had deteriorated before his very eyes. Nevertheless, LPL allowed its branch manager to roam among them unbridled to solicit and sell these seniors high risk oil and gas partnerships and junk bonds, which were unsuitable based upon their station in life, financial needs, investment objectives and tolerance for risk. The details are even more egregious, epitomizing elder abuse and elder exploitation. What follows is a sampling of the clients involved in the unsuitable transactions.
One client, who was 89 years old and had been a client for over a decade, had significant loss of hearing, cognitive skills and was easily confused and disoriented. Notwithstanding these known impairments, Kleck solicited this elderly man to purchase high risk oil and gas partnerships. Kleck would either take the client to the bank to make the withdrawals or send someone from his office to go and wait for the money. Kleck and his employees would go so far as to ask the teller about recent deposits and inquire about the account balance, only to be informed that bank policy prohibited the release of such information to anyone other than the accountholder. During 2003 and 2005, Kleck or his assistant took the elderly client to the bank and on at least 6 or 7 occasions sold him junk bonds and partnerships. At no time was the elderly client's son contacted or informed about any transactions, although there was a written power of attorney on file advising that he was to act as an agent for his father.
Another client, who was 81 and had been a client for over a decade, was solicited by Kleck to purchase two high risk, oil and gas general partnerships, without explaining that investing as a general partner he could be exposed to unlimited liability that exceeded the amount of his investment. Another 71 year old client and an 85 year old had been investors with Kleck for over two decades. They were also sold general partnership units on at least six occasions, without explaining the potential exposure to unlimited liability, above and beyond the amount of the investment.
Finally, there was an 89 year old who was in an Oregon hospital undergoing treatment for cancer when he was sold an oil and gas general partnership unit, less than two months prior to his death in June 2004. Fortunately, Oregon authorities revoked Kleck's securities license and he has not been associated with any firm since 2007, according to Financial Industry Regulatory Authority (FINRA) records.
If you or someone you know has suffered losses at the hands of Jack Kleck, some other LPL Financial representative or have been subjected to elder financial exploitation, we would like to hear from you to discuss your potential claims. Please contact our securities law firm at 1-800-259-9010 for a no obligation consultation.