(Adds details on the sanction in paragraph 3)
By Suzanne Barlyn
Aug 28 A former broker for a unit of LPL
Financial LLC accused of diverting clients' funds for his
personal expenses has been ordered by a federal judge to pay
more than $1.9 million in civil sanctions.
In announcing the ruling against Blake Richards, of Buford,
Georgia, the U.S. Securities and Exchange Commission said on
Thursday the sum largely represents the amount that Richards
pocketed during a four-year-long scam that involved luring
clients into writing checks for fictitious investments.
Richards told clients to make the checks out to his businesses
outside of LPL, a unit of LPL Financial Holdings Inc.
Judge Willis Hunt, Jr. of U.S. District Court for the
Northern District of Georgia entered the ruling against Richards
on Tuesday, the SEC said. The sanctions include $1.83 million to
be returned to clients, including interest, plus an $80,000
A phone number for Richards was in non-working order on
Thursday. Richards agreed to a court order last year that
prohibited him from engaging in further securities law
violations, the SEC said. He neither admitted to nor denied the
Richards defrauded at least seven investors, who typically
handed over their retirement savings or life insurance proceeds
from deceased spouses, the SEC said in its civil suit last year
. Richards told the investors he would put their
funds in fixed-income assets, variable annuities and other
securities, but never did so, the SEC said. He then "siphoned
off" their money for his personal use, the SEC said.
LPL had said at the time that another LPL adviser reported
Richards' alleged misconduct. The firm fired Richards and
notified securities regulators and law enforcement authorities,
a spokeswoman said at the time. The alleged wrongdoing did not
occur through LPL accounts, she said.
The Financial Industry Regulatory Authority, which licenses
securities brokers, barred Richards from the industry in
September 2013, according to a regulatory filing.
(Reporting by Suzanne Barlyn; Editing by Leslie Adler and Tom