If Allegations Prove True, File This Under: Stupid Broker

The SEC has filed a complaint against a former LPL rep and branch manager, who, the SEC says, had been engaging in one of the oldest broker tricks in the book: Stealing his clients money.

The SEC has filed a complaint against a former LPL rep and branch manager, who, the SEC says, had been engaging in one of the oldest broker tricks in the book: stealing his clients money.

The SEC says that Robert A. Loffredi, 60, president of something called Raymond Financial Group raised $2.8 million from at least 14 clients by “falsely representing that he would invest their funds in securities, primarily in the form of purported certificates of deposit.” (LPL, which severed ties with him in early October, is not named as a defendant in the case.)

Instead, the complaint says, Loffredi used the customers’ funds to pay his personal and business expenses, to make payments to his wife’s business (she was also a rep but ran a consulting business as well) and to pay off other “customers who had invested in ficticious securities.” He still owes $2.4 million to investors.

If the allegations are true—and the SEC says Loffredi copped to the fraud in sworn testimony on 16 Oct.—well, he's a moron. Discovery of the scheme? A typo. Loffredi roused a client's suspicion because of a typo on the account statement. The customer called LPL and FINRA. LPL, the complaint says, sent an internal audit team who discovered evidence of the fraud and promptly took action against Loffredi.

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