FINRA Suspends Karl Chen For 20 Months

Karl Chen (CRD #: 6424082), a broker formerly registered with LPL Financial, allegedly executed unauthorized transactions, according to his BrokerCheck record, accessed on November 8, 2024. Keep reading if you have questions about his alleged conduct as a broker.

FINRA Suspension

On October 8, 2024, Karl Chen consented to the entry of findings that he allegedly falsified information on client account forms by adding his own name as a beneficiary without clients’ knowledge and executed unauthorized trades.

According to a Letter of Acceptance, Waiver & Consent (AWC), in January 2022, Karl Chen allegedly added his name as a beneficiary to the accounts of eight customers who had transferred their accounts from another firm. He allegedly did not seek or receive approval from the clients or his firm, LPL Financial, before doing so, and also identified himself as a “friend of relative” on these forms. 

Additionally, in August 2022, Karl Chen allegedly executed sales of approximately 140 mutual funds in 60 client accounts, totaling over $1.9 million, and 139 Unit Investment Trusts (UITs) in 57 client accounts, totaling over $1.7 million, all without clients’ authorization.

The AWC concluded that this alleged misconduct constituted violations of FINRA Rules 3241 and 2010.

FINRA Rule 3241

FINRA Rule 3241 describes the conditions under which brokers are allowed to be named a beneficiary of a client’s estate, including being immediate family members. It also requires brokers to provide advance written notice and receive approval from their member firm.

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade. 

Sanctions

Karl Chen consented to the following sanctions:

• 20-month suspension from associating with FINRA members
• Completion of 20 hours of continuing education on discretionary trading within 60 days of reassociation with a FINRA member firm

His suspension began on October 21, 2024, and will end on June 20, 2026. You can read the full AWC here.

Termination by Consolidated Portfolio Review Corp

On September 30, 2024, Karl Chen was fired from Consolidated Portfolio Review Corporation for allegedly failing to fully disclose the details of his termination from another firm.

Termination from LPL Financial

On October 28, 2022, Karl Chen was fired from LPL Financial after allegedly executing transactions in client accounts without valid written authorization.

FINRA Rule 3260

FINRA Rule 3260 restricts brokers from exercising their trading discretion outside pre-approved discretionary accounts. These accounts must be approved for discretionary trading by both the client and the firm.

Tax Lien

On April 20, 2022, Karl Chen was subject of a tax lien of $121,600.

Background Information

Karl Chen has passed the following exams:

• Series 66 – Uniform Combined State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination

He previously worked for the following firms:

• LPL Financial (CRD#:6413)
• Waddell & Reed (CRD#:866)
• Ameriprise Financial Services (CRD#:6363)

Kurta Law Can Help

If you worked with Karl Chen and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.