A former LPL Financial LLC financial adviser is suing the firm, alleging that the largest independent broker-dealer wrongfully fired him and in turn defamed his reputation on the eve of the its initial public offering last year.
Robert Ray Bennie Jr. of Lincoln, Neb., also is suing several Nebraska securities regulatory officials, alleging that they subjected him to “an unrelenting string of five separate investigations” after he paid for and ran a local television ad for his firm in 2009 that promised new clients $100 toward the purchase of a firearm. (To view the commercial, go to the end of this article)
“Mr. Bennie brings this legal action to clear his name, which LPL has been slinging in the mud as a malicious public-relations stunt over the past year, designed to protect LPL's stock price in the face of threatened class action litigation against LPL,” according to his complaint against LPL, which he filed in June as an arbitration claim with the Financial Industry Regulatory Authority Inc.
LPL abruptly terminated its relationship with Mr. Bennie on Nov. 2, 2010, according to the claim. He is also suing four Nebraska regulators in U.S. District Court in Lincoln: John Munn, director of the Nebraska Department of Banking and Finance, Jack Herstein, assistant director; Rodney Griess, investigation and compliance unit supervisor for the Nebraska Bureau of Securities; and Jackie Walter, a securities examiner with the bureau.
This week, Mr. Herstein was named president for one year of the North American Securities Administrators Association.
Mr. Bennie, a one-time Barron's Magazine top 1,000 investment adviser, is now a registered representative affiliated with Prospera Financial Services Inc., and his practice is Bob Bennie Wealth Management Inc. Mr. Bennie said his firm's current assets under management were close to $85 million.
In an interview, he said that he is being targeted because of past political statements. According to local press reports, he is a prominent “tea party” activist and has called President Barack Obama a “communist,” “dishonest” and an “evil man.”
Mr. Bennie filed an amended complaint with the court this month.
“Upon information and belief, LPL's action was related to the continued pressure and harassment” from the regulators, and to LPL's IPO and “its desire to separate from Mr. Bennie prior to that event,” according to the lawsuit.
In the amended complaint, he cited e-mails from regulators that allegedly pressured LPL to cut ties with Mr. Bennie and threatened to take action against the firm.
“The department is expressly concerned, not only with the persistent, multiple, repeated acts of noncompliance but with the continued failure of LPL to act in an appropriate manner to remedy the larger issue,” according to one e-mail from Mr. Griess that is cited in the federal lawsuit.
“Government employees shouldn't be able to do this,” Mr. Bennie said. “It's obvious [the regulators] are harassing LPL in those e-mails.”
Mr. Bennie's firm lost $25 million in assets under management after being separated from LPL, according to the federal lawsuit. He is seeking $6.4 million in damages from the Nebraska regulators that he is suing and unspecified damages from LPL in the Finra arbitration.
According to Mr. Bennie's profile on Finra's BrokerCheck system, LPL claims that it discharged Mr. Bennie for violating the firm's policies and procedures related to obtaining client signatures on account documents. He has one current and five former customer complaints listed on his BrokerCheck profile.
Michael Herley, a spokesman for LPL Financial, said: “As a matter of policy, we do not comment on pending legal matters.”
The Nebraska Department of Banking and Finance last month filed a motion to dismiss Mr. Bennie's original complaint and is preparing a reply to his amended complaint, said Patricia Herstein, the agency's legal counsel and Mr. Herstein's sister-in-law. She declined to comment further, citing the lawsuit's continuing status.
