Ex-LPL Broker Suspended over Undisclosed Nutritional Supplements Business
The Financial Industry Regulatory Authority has fined and suspended a former LPL Financial broker in Baton Rouge, Louisiana, who did not properly disclose his involvement in a nutritional supplements business, according to a letter of settlement.Michael E. Olinde agreed to two-month suspension and $5,000 fine for failing to seek approval between September 2012 and April 2016 for his involvement in Avie Nutraceuticals in violation of LPL’s policies and Finra rules governing outside business activities, according to the settlement, which was finalized on Tuesday.
Olinde also falsely attested on three annual firm compliance questionnaires that he was not involved in any outside business activities even though he had filed the articles of incorporation for the business, opened its bank account, managed its expenses and owned stake of the company, Finra said.
The action highlights the regulator’s ongoing scrutiny of outside business activities amid a broader focus on disclosure and supervision of potential conflicts of interest with customers. The regulator has also been evaluating whether to update its rules on outside activities to clarify reporting obligations, but a proposal last year aimed at “reducing unnecessary burdens” is still pending, according to the regulator’s website.
Olinde’s lawyer and brother, Henry D.H. Olinde, Jr., who is also a partner in Avie Nutraceuticals, said that Michael did not report the business initially because it was a small venture between close friends and family. Michael, who owns roughly 18% of Avie, self-reported to LPL in May 2016 after it “coalesced into a real business,” Henry said.
The violation “was totally unintentional,” Henry said, while acknowledging that he felt the enforcement panel was “not unfair.”
LPL fired Michael in May 2017 for violating firm policies on outside business activities, according to his BrokerCheck report, which does not show any record of customer complaints or other disclosures.
A spokeswoman for LPL did not immediately return a request for comment.
Michael, who is now an independent broker registered with Calton & Associates, Inc., did not respond to a call for comment. His business focuses primarily on managing 401(k) accounts, according to Henry.
Michael’s BrokerCheck report currently lists his involvement in 14 outside business activities, including his work as a partner and board member at Avie. He spends around 11 hours per month, including six during trading hours, on Avie-related business, according to the report.
Michael also owns a staffing company, Alpha Consulting Group., is co-host of a catholic radio show called Principle Matters, LLC., and has a “passive” stake in a family business and a number of real estate holdings, according to BrokerCheck.
The Olinde family has deep roots in the Louisiana business community that trace back to a chain of furniture stores and a beer distribution business and in 2014 donated to obtain naming rights for Louisiana State University’s Olinde Career Center.