Wunderlich Securities' aggressive growth plans have hit a speed bump.

The broker-dealer has reversed course on its plans to hire James "Jeb" Bashaw -- a former top LPL advisor whose eponymous Houston firm had $3.8 billion in assets under management in 2011.

"I can confirm that Wunderlich and Mr. Bashaw have mutually agreed not to pursue a relationship at this time," Wunderlich spokeswoman Kathy Ridley wrote in an email.

Wunderlich made the decision amid growing public scrutiny of LPL Financial's decision to terminate its relationship with Bashaw for allegedly borrowing client money, engaging in a business transaction that created a potential conflict of interest and selling investments without the permission of his broker-dealer -- a practice known as "selling away."

LPL's claims are "false and defamatory," Bashaw's lawyer, Anthony Paduano, told the Houston Business Journal this week. Paduano did not return multiple calls for comment. Bashaw also could not be reached for comment; calls to the new office that bears his name, the Bashaw Group, were not returned.

A spokesperson for LPL declined to answer questions about the case.

As recently as last week, Wunderlich said Bashaw's hiring was being held up while FINRA reviewed his licenses. Bashaw's Broker Check page on FINRA's website currently lists him as "unlicensed." FINRA declined to comment further.

Earlier this month, Wunderlich Securities announced plans to double its number of advisors, using a $40 million injection of new capital -- but "it's going to be done with the right people," CEO Gary Wunderlich said at the time.


Houston trial lawyer Tom Ajamie says he has spoken with several of Bashaw's current or former clients, and that the "selling away" complaints about Bashaw stem in part from private placement deals.

Many advisors consider private placements to be too risky because they are not regulated, difficult to value and sometimes impossible for investors to exit.

FINRA requires member firms that sell private placements to file a private placement memorandum, term sheet or other offering document with its Corporate Financing Department at or before the first time that those document are given to prospective investors.

LPL's regulatory filing cited Bashaw's failure to provide "written disclosure to and [obtain] written approval from the firm" when "participating in private securities transactions."

But Ajamie says he wants to know whether LPL had received other forms of communication, perhaps in verbal form, from Bashaw about his investment strategies.

"Even when the B-D says, 'Oh, it was selling away,' we say, 'OK, let's trace the money,'" says Ajamie, who emphasizes that he's speaking generally about selling away cases and not specifically about Bashaw's case. "'You say it was selling away, but you took this money from him.' That's how we win these cases."

Read more:


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access