The Financial Industry Regulatory Authority fined and suspended a former LPL broker for allegedly borrowing from a customer and unauthorized trading, according to a letter of settlement finalized on Tuesday.
Kevin J. Carroll, who logged 23 years in the industry and was based in Glastonbury, Connecticut, accepted a four-month suspension and $10,000 fine without admitting or denying the allegations.
In July 2021, Carroll borrowed $31,170 from the client, who was also his friend, although the broker’s supervisor warned him that the loan would not be permitted, Finra said. Carroll has not made any payments, but the customer has not complained, according to the letter.
Additionally, from March to July 2021, Carroll made at least seven unauthorized trades in two senior customers’ accounts. Most of the transactions used proceeds of maturing Unit Investment Trusts to purchase new ones, according to the letter.
Carroll violated Finra rules prohibiting brokers from borrowing from customers without approval, restrictions against unauthorized trading and the regulator’s catch-all Rule 2010 requiring “high standards.”
The broker, who represented himself, could not be reached for comment. He has not been registered since March 2022, according to BrokerCheck.
The Finra action was not Carroll’s first brush with litigation.
In 2020, arbitrators ordered Carroll to pay $707,000 plus interest and attorneys’ fees to Wells for breaching his promissory note when he moved to LPL. At Wells, Carroll had managed $110 million along with a partner, Sam Shehu. (Finra fined and suspended Shehu in June 2022 for allegedly signing his partner’s name on account opening documents in violation of firm policy, according to BrokerCheck.)
LPL terminated Carroll in late July 2021 over allegations of unauthorized trading that resulted in “verbal customer grievances,” according to his BrokerCheck profile. Carroll denied the allegations and said in a comment appended to his BrokerCheck that he intends to seek expungement.
Carroll started his career in 1999 at Advest, Inc. He also worked at discount brokerage Banc of America Securities, Smith Barney, Merrill Lynch and Wells Fargo before joining LPL in 2019.
After his discharge from LPL, he worked at Buell Securities, Inc. from 2021 to 2022, according to his BrokerCheck profile.
A spokesperson for LPL and Buell did not immediately respond to requests for comment on the settlement.
Carroll has one customer dispute on his record. The February 2015 complaint over unauthorized trading settled for $38,702. It also shows he still has an outstanding judgment from Wells Fargo for $732,673.
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