The Securities and Exchange Commission on Wednesday barred a former LPL Financial advisor who worked alongside Andrew Komarow, a former financial advisor who built a practice focused on clients with special needs and autism and who recently was barred from the securities industry for a trading scheme.
The assistant to Komarow was Kerry Lee Broderick, who was registered with LPL Financial from November 2021 to November 2023, the total of her stint in the securities industry.
According to the SEC's order, Komarow created a so-called “free-riding” trading scheme, knowingly making unfunded automated clearing house transfers of money from his bank account to his personal brokerage account.
He then allegedly engaged in speculative trading with the resulting credits before the transfers were cancelled for insufficient funds, resulting in losses for the firm.
According to the SEC's order, Broderick spoke to other reps at the broker-dealer to initiate trades for Komarow and to assure the firm that the trades that Komarow had placed should be processed and were funded.
"When Broderick participated in those calls, she knew, or was reckless in not knowing, or should have known that the information she was communicating was false," according to the SEC.
Broderick did not respond to a message Thursday morning via LinkedIn to comment. She reached a settlement with the SEC about the matter without admitting or denying the Commission's findings.
A spokesperson for LPL Financial, where Komarow worked from April 2016 to December 2022, did not return a call Thursday to comment.
"This is always tricky," said Sander Ressler, managing director of Essential Edge Compliance Outsourcing Services. "I’ve dealt with financial professionals who have done bad things and had their assistants and junior people right next to them.
"One of chief elements of a culture of good compliance is, if you see something, say something," Ressler said. "A younger financial professional must realize that if they don't remain aware, there will be regulatory consequences."
“Free-riding” is a fraudulent practice in which securities traders seek to exploit the “immediate access” credit that’s extended by certain broker-dealers in advance of incoming deposits of cash from bank accounts.
Komarow hired Broderick and oversaw her work, according to the SEC. In December 2022, Komarow initiated the free-riding trades in question using Broderick’s log-in credentials at their broker-dealer, which the SEC calls "broker-dealer A' in the order but was LPL in reality.
Broderick eventually told LPL that she had initiated the trades, even though she had not done so and first became aware of the trades when LPL called her, the SEC alleges.
In the afternoon of December 1, 2022, Komarow asked Broderick to call in orders for additional trades, according to the SEC, and offered her a bonus via a chat message.
He then told Broderick: “lie, whatever you have to do, to get those trades placed.” She later told Komarow that she was able to get his trade orders through, according to the SEC.
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