A former broker in New Jersey with LPL Financial, Carlos Leston, had his registration revoked last week by the state’s Bureau of Securities for recommending and selling unsuitable, high-risk investments to elderly clients that were not in their best interest, benefited him financially, and resulted in financial losses for them, according to the state regulator.
Leston, of Maywood, N.J., offered and sold two elderly clients a total of $3.65 million in securities in a New York lending company, without disclosing that the CEO of the corporation was a friend of his who had been barred from the securities industry, according to the Bureau of Securities in a statement from October 1.
Leston also did not disclose that he had a “referral arrangement” with the lending company and was compensated more than $1.5 million by the company.
Reached by phone on Monday, Leston said the amount of commissions generated by the sales of the investments in questions was far less.
“The numbers are wrong, the $1.5 million in commissions is wrong,” Leston said. “It’s a fraction of that. It’s not even close to that.”
Anthony Varbero, Leston’s attorney, said the $1.5 million in commissions paid is “unequivocally incorrect and false.” He added that there was another advisor, who was an attorney and a CFP, also aware of these transactions.
The Financial Industry Regulatory Authority Inc. two year ago barred Leston from the securities industry after refusing to cooperate in a Finra investigation into his practice. A 22-year industry veteran, Leston worked as an LPL broker from 2008 to 2022.
According to his BrokerCheck report, Leston has been named in one securities complaint involving the sale of promissory notes to clients that was settled this year for $165,000.
“On Leston’s recommendation, the elderly clients liquidated existing insurance annuities they relied on for steady incomes and used the proceeds to purchase the investments, which were neither suitable nor in their best interest,” according to the statement by the Bureau of Securities. “As a result of the full or partial surrenders of their annuity contracts, the clients incurred losses, taxes, and surrender charges that exceeded any potential benefit of purchasing the lending company securities.”
“The transactions violated numerous policies and procedures in place at the broker-dealer, including those mandating that agents comply with Regulation Best Interest, a federal rule that requires broker-dealers to act in the best interest of their retail customers when making recommendations about securities transactions or investment strategies,” according to the statement by the Bureau of Securities.
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