Ex-LPL broker barred over loans for luxury Hawaii vacation rental

Ex-LPL broker barred over loans for luxury Hawaii vacation rental
Raymond Schmidt borrowed some $2.25 million from customers to build an island retreat without notifying his firm, Finra said.
MAY 06, 2015
The Financial Industry Regulatory Authority Inc. has barred a former LPL Financial broker who borrowed money from clients without telling his firm to set up a luxury vacation rental property in Hawaii. Raymond Schmidt, who was based in Oceanside, Calif., obtained $2.25 million in loans from seven customers between 2009 and 2012 without notifying his firm, Finra said in a settlement letter. Brokers are generally prohibited from borrowing funds from customers, except in certain circumstances, and they must notify their firms in all cases, according to Finra rules. In this case, Mr. Schmidt submitted five compliance questionnaires to LPL in which he falsely denied borrowing funds and did not disclose the real estate investment in Hawaii as an outside business activity, according to the letter. Mr. Schmidt agreed to the ban without admitting or denying the findings. Mr. Schmidt eventually made disclosures about the property in Hawaii to LPL in 2013, but falsely reported that the loans were for construction of a personal residence and that he did not own any interest in the vacation rental property, according to Finra. The disclosure, which is available through BrokerCheck, lists the property as the Pakalana Sanctuary, a 4,000 square-foot picturesque bamboo house in a beachfront community in Kanuela, Hawaii. It is listed for sale online by a real estate agent for $2.4 million. When the property officially opened for business in January 2013, Mr. Schmidt, who is listed as the co-owner, said in a press release that, “being able to share my love of this beautiful island and all it has to offer to visitors is a dream come true for me.” Mr. Schmidt could not be reached for comment. A number listed for Pakalana was not accepting voice mail. Finra did not accuse Mr. Schmidt of failing to pay back the loans. He does, however, have pending customer complaint for $375,000 for constructive fraud and elder abuse “relating to plaintiff's investment in a Hawaii real estate project,” according to BrokerCheck. Mr. Schmidt had been at LPL from 2006 until August, when he resigned while under internal review, according to the settlement letter. An LPL spokesman, Brett Weinberg, declined to comment. When Finra asked Mr. Schmidt for information about the loans in February, he said he would not cooperate with the investigation, the regulator said.

Latest News

The hidden currency risk in global investing: what advisors need to know
The hidden currency risk in global investing: what advisors need to know

For those seeking international exposure amid economic uncertainty, understanding the impact of the US dollar's strength over other currencies is more important than ever.

CFP Board warns of tax "tipping point" as TCJA expiration puts financial plans at risk
CFP Board warns of tax "tipping point" as TCJA expiration puts financial plans at risk

With nearly nine in 10 seeing danger to clients' retirement income and legacy plans, among others, CFP professionals are urging strategic planning pivots and tax perks for advice-seekers.

Fed Day focus fades as Trump keeps stock markets watching
Fed Day focus fades as Trump keeps stock markets watching

As policymakers convene for their latest two-day meeting, investors are shifting their attention from elevated interest rates to growth concerns and tariff worries.

IRS eases off on some audits with retrenchments giving way to AI
IRS eases off on some audits with retrenchments giving way to AI

While he hasn't laid out a clear plan, Treasury Secretary Scott Bessent has gone on record touting "the great AI revolution" in improving the agency's tax collections and customer service.

More than three-quarters of advisors to embrace fee models by 2026, Cerulli says
More than three-quarters of advisors to embrace fee models by 2026, Cerulli says

Momentum continues for fee-based compensation as BD advisors ditch commissions and alternative compensation schemes emerge to lure diverse clientele.

SPONSORED Beyond the all-in-one: Why specialization is key in wealth tech

In an industry of broad solutions, firms like intelliflo prove 'you just need tools that play well together'

SPONSORED Record growth: Interval funds emerge as key players in alternative investments

Blue Vault Alts Summit highlights the role of liquidity-focused funds in reshaping advisor strategies