Fired LPL rep faces 22-month Finra suspension after secretly borrowing $50k from clients

A former registered representative has agreed to a nearly two-year suspension and a fine after Finra found he borrowed tens of thousands of dollars from clients without his employer’s knowledge and later provided false information to regulators.

Jacob Lee Harper, who was most recently registered with LPL Financial and previously with DA Davidson, consented to the sanctions without admitting or denying Finra’s findings, according to a settlement letter made public this week. LPL terminated Harper's registration with the firm last month.

Finra said Harper borrowed $20,000 from one client in November 2024 and $30,000 from another client in January this year. Both were his friends, and neither client was a member of his immediate family nor a lending-related financial institution.

"The loans ... were not documented in writing and had no specified duration, repayment schedule, or interest rate," Finra said in the AWC letter dated November 4. "Harper did not notify D.A. Davidson or seek the firm's prior approval of either loan."

After receiving the loans, Harper falsely certified in a compliance form that he had no borrowing arrangements with clients outside his immediate family or financial institutions, according to Finra. He later repaid $3,000 to one of the clients, but no other principal or interest payments have been made to either client.

Finra rules prohibit registered representatives from borrowing money from clients unless the firm’s procedures allow it and the arrangement meets specific conditions, including obtaining prior written approval. The regulator found that Harper’s actions violated those rules, as well as its standards for commercial honor and equitable principles of trade.

The settlement letter also details how Harper provided misleading and incomplete responses to Finra during its investigation. When first asked during an examination in April to disclose any items of value received from clients, Harper told Finra that one client had paid him for a vehicle, omitting any mention of the loans.

In a subsequent response, he made further false statements about the supposed vehicle transaction. It was not until June this year that Harper admitted no vehicle sale had occurred and disclosed the loans to both clients.

Finra also found that Harper established and traded in three outside securities accounts held in his fiancée’s name without obtaining prior written consent from his employers, as required by industry rules. 

"Harper materially contributed to his fiancée's financial support, including through the loans he obtained from Customers A and B, which were obtained partly to provide financial support to their joint business," Finra's AWC letter said.

Over the course of a year, Harper placed more than 1,000 trades in these accounts, including transactions involving securities that were restricted at D.A. Davidson. He also failed to disclose the accounts to LPL Financial when he joined the firm, only doing so months later.

For these violations, Harper is barred from associating with any Finra member in any capacity for 22 months and must pay a $17,500 fine. The fine is due either upon reassociation with a member firm or before any application for relief from statutory disqualification.