Finra Suspends Former LPL Star for Borrowing from Customer
James E. “Jeb” Bashaw, a former LPL Financial broker who was fired in 2014, agreed on Tuesday to a four-month suspension from working for a brokerage firm, a $5,000 fine and a requirement to requalify for his Series 7 registered rep exam, according to a Financial Industry Regulatory Authority acceptance, waiver and consent document.
The Houston-based independent broker accepted the sanctions without admitting or denying Finra’s findings that he accepted three loans in 2013 totaling about $200,000 from an LPL customer and “longtime friend” in violation of its rules and of LPL’s policy restricting borrowing from a customer other than a family member.
Bashaw, who is currently registered with International Assets Advisory, LLC, did not immediately return a call for comment left at a number provided by IAA. His lawyers at Paduano & Weintraub in New York City also did not respond to a request for comment.
The decision continues an explosive history for Bashaw, who was one of LPL’s top 25 producers and a personal friend of its former chairman and CEO Mark Casady at the time he was fired in September 2014, according to documents obtained by Financial Planning magazine. He was terminated over the loan arrangements and allegations that he made private investments outside of the firm’s jurisdiction without its knowledge, according to Bashaw’s BrokerCheck history.
Bashaw filed an arbitration claim against LPL in 2016 initially seeking $30 million for defamation and his claim that the firm audited his practice as a pretext to raid his employees, steal his clients and destroy his career. A three-person panel of arbitrators in 2017 denied his claims in a split decision, but ordered LPL to pay him $25,000 in attorneys’ fees for failing to produce documents during the arbitration.
In the consent letter Bashaw signed this week, Finra said his borrowing from a customer violated its Rule 3240 governing loans, and its broad-based Rule 2010 requiring members to observe high standards of commercial and just and equitable principles of trade. It also said that he did not seek or obtain prior approval of the loans from LPL nor repay the loans, and that he falsely attested on annual compliance questionnaires that he participated in any prohibited activities.
Bashaw filed a Chapter 11 bankruptcy petition in December 2017 that disclosed the debt as a “personal loan,” according to the Finra document. The Chapter 11 bankruptcy proceeding was closed in June 2018, it said.