Runs in the Family: Finra Suspends Broker Who Helped His Barred Father See Clients
The Financial Industry Regulatory Authority has fined and suspended a former broker with Cambridge Investment Research who allegedly helped his father, who had been barred from the industry, continue working with clients, according to a letter of settlement finalized Thursday.
Finra said that from September 2018 until February 2019, the younger Schumaker allowed his father, Jeffrey A. Schumaker, to attend in-person client meetings to discuss brokerage account strategies, email customers about their accounts and maintain an office and share a phone line at the branch location.
Jeffrey, who was not named in the settlement document, had been barred in 2014 after declining to cooperate with Finra’s probe into allegations that he misappropriated around $8,200 from a homeowner’s association for which he had served as treasurer, according to his BrokerCheck.
Jeffrey had not informed all of his customers that he was no longer permitted to provide brokerage services, and James had become the broker of record on the accounts in 2018, according to the settlement letter.
James, who is no longer registered as a broker but has since 2019 worked as an investment advisor with Franklin, Tennessee-based Optivise Advisory Services, according to SEC records, could not be reached for comment. His attorney, Scott Matasar of Cleveland, Ohio law firm Matasar Jacobs, declined to comment.
The Finra bar will not affect his ability to operate as a registered investment adviser unless the Securities and Exchange Commission or state regulators take separate action.
Finra said that Cambridge discovered the issue during a branch audit in November 2018 of the family’s practice, Schumaker Financial LLC. Cambridge examiners found Schumaker’s father on the premises and warned Schumaker that his father could not be there or provide any investment advice relating to brokerage accounts, Finra said, adding that Schumaker had confirmed he “understood.”
However, when Cambridge performed a second audit in February 2019, it found Schumaker’s father “on the premises in a meeting with Schumaker and a brokerage customer in the conference room.”
The elder Schumaker had been registered as a broker for 24 years prior to his industry bar.
James Schumaker first registered with OneAmerica Securities in April 2018 and switched to Cambridge in September of that year, according to his BrokerCheck record.
Cambridge filed a U5 in March 2019 noting it had terminated Schumaker due to a “loss of confidence in the registered representative,” Finra said.