Walter Chao fined, suspended by FINRA

In October, 2015, the Financial Industry Regulatory Authority (“FINRA”) announced that Walter Chao submitted a Letter of Acceptance, Waiver and Consent (AWC) in which he was assessed a deferred fine of $30,000, suspended from association with any FINRA member in any capacity for two years. He was also required to requalify as a general securities principal by taking and passing the Series 24 examination prior to associating with any FINRA member firm as a general securities principal following his suspension.

Without admitting or denying the findings, Walter Chao consented to the sanctions, and to the entry of findings that he participated in private securities transactions totaling $1.27 million without his firm’s approval. The findings stated that Chao had requested approval but the firm denied his request.

The findings also stated that Chao took steps to conceal his participation in the private securities transactions from his firm. Chao regularly used an unapproved email address for communications related to the transactions with the selling firm. In addition, Chao provided false and misleading answers in his firm’s compliance questionnaire by stating that he had not participated in any private securities transactions, and failed to disclose his use of an unapproved email address. The findings also included that Chao provided false and misleading statements to FINRA regarding his involvement in the private securities transactions.

In addition, FINRA also found that as a branch manager Chao failed to adequately supervise, and failed to take adequate steps to ensure that his office did not utilize blank signed forms and unapproved email addresses.

The suspension is in effect from August 17, 2015, through August 16, 2017.

Walter Chao’s registration and disciplinary history

In order to lawfully sell investments to the public, one must either be registered or exempt from registration.

Walter Chao was registered with

10/2012 – 01/2015
PURSHE KAPLAN STERLING INVESTMENTS (CRD# 35747) – SAN MATEO, CA
08/2007 – 09/2012
LPL FINANCIAL LLC (CRD# 6413) – SAN MATEO, CA
07/2003 – 09/2007
NYLIFE SECURITIES LLC (CRD# 5167) – SAN MATEO, CA

According to FINRA’s CRD disclosure report, Walter Chao has been the subject of one regulatory investigation.

The Law Office of David Liebrader practices exclusively in the field of investment loss recovery and our securities attorneys have successfully resolved over 1000 investment loss cases over the past 20 years. Recoveries for clients top $40 million. The types of claims we have successfully handled include those involving unsuitable investments (suitability claims), excessive trading or “churning”, misrepresentations and omissions, unauthorized trading, over-concentration of illiquid or overly risky investments, pump and dump scams involving “penny stocks”, direct participation programs (private placements) involving real estate investment trusts (REITS), oil and gas exploration programs, leasing equipment deals and receivable financing, promissory notes whether sold through a broker dealer or as part of the outside business activities of a registered representative, ponzi scheme losses, failure on the part of the broker dealer to perform due diligence, state securities law (blue sky) violations and failure to supervise.

Investment losses can be recovered through a process known as FINRA arbitration. FINRA regulates broker dealers that sell investments, and provides an arbitration forum to resolve investor disputes. Investors can pursue claims against their brokerage firms in the FINRA arbitration forum. Common claims in the forum are those for suitability, breach of fiduciary duty, misrepresentations and omissions, negligence, violation of FINRA rules, state and federal securities laws violations, elder abuse, breach of contract and failure to supervise. On average, the recovery process takes approximately a year, from start to finish.

FINRA’s rules require that all investment recommendations made by licensed financial advisors be suitable in light of a customer’s needs, objectives and risk tolerance. In addition, all registered representatives are required to be properly supervised, with periodic inspections and reviews by qualified supervisors, whose job it is to vigorously investigate suspicions of wrongdoing (red flags).

If you have suffered investment losses please call The Law Office of David Liebrader at (702) 380-3131 for a free, confidential consultation