A former LPL Financial advisor is accusing the firm of making a false allegation in a U5 filing, which said he faced an investigation for unauthorized trading in client accounts before the 2016 election.
Gilberto Briseno, who has since joined Arkadios Capital, alleges LPL backdated his clients’ trades to make it look like he was guilty of wrongdoing and later filed the U5 amendment even though it had closed the investigation months earlier. The New Orleans-area advisor filed the lawsuit on July 3.
The lawsuit claims LPL committed breach of contract, bad faith, unfair competition, defamation, abuse of rights and whistleblower retaliation. Briseno did not specify the amount of damages, but his claim includes attorney fees and interest, as well as “shame, mortification, hurt feelings” and “emotional damages.”
In FINRA arbitration, claims of defamation and libel or slander on Form U5 have appeared in 148 filings through May, a 56% jump over the same time in 2017. Defamation represents one of the most common claims made by advisors against their onetime firms, though one which can be very difficult to prove.
“The U5 filing made by LPL was made with knowledge that no investigation supported the unsubstantiated and obviously false statements,” Briseno’s lawsuit says. “LPL published these statements knowing them to be false, unsubstantiated by any reasonable investigation, and were the product of false and misleading allegations that had been disproven.”
LPL spokeswoman Lauren Hoyt-Williams rejected Briseno's allegation.
"Mr. Briseno voluntarily resigned from LPL in July of 2017," Hoyt-Williams said in an emailed statement. "His U5 was filed in August and it factually represented that he was under internal review at the time of his resignation."
Briseno, who has spent 28 years in the industry, had affiliated with LPL for five years before aligning with Arkadios last year, according to FINRA BrokerCheck. The lawsuit stems from provisions of his representative and branch office manager agreements with the firm.
Briseno claims his struggles with the nation’s largest independent broker-dealer started when LPL “systematically underpaid” his commissions. Then the firm reassigned him to a new compliance officer who cut off his access to account files which could have confirmed the discrepancies, the lawsuit says.
In November 2016, Briseno traded securities in client accounts prior to the presidential election “due to uncertainty in the market,” according to the lawsuit. He reached out to each of his clients over a three-day period and followed their guidance on the trades, the lawsuit states.
More than five months later, though, LPL notified Briseno of the investigation, according to the lawsuit.
Briseno claims to have discovered that LPL altered the dates of the transactions, and he later filed a complaint with the firm about the compliance officer “whose incompetence caused the false, inaccurate bulk trading investigation allegations.” In early summer, he says, the firm informed him it had closed the investigation.
Weeks after he left LPL, though, the firm filed the U5 disclosure stating that Briseno was under investigation, according to the lawsuit. The filing cost him his licenses in Washington and certain other states, the lawsuit says.
Briseno’s lawyer filed the suit in the U.S. District Court for the Eastern District of Louisiana. Judge Eldon Fallon and Magistrate Judge Joseph Wilkinson received the initial assignment in the case.