The Financial Industry Regulatory Authority announced that it has barred former LPL Financial-affiliated general securities representative Derek Lee Copeland as a result of his execution of private securities transactions without providing prior written notice to the firm.
According to FINRA, from March 2020 to January 2023, Copeland participated in 74 private securities transactions without disclosing these activities to LPL Financial. These transactions involved Copeland recommending securities to 27 individuals, most of whom were LPL customers. The customers collectively invested nearly $11 million in 19 different securities, intended to fund real estate development projects and investments in other businesses, and Copeland received at least $173,000 in compensation.
FINRA said that Copeland’s involvement in the private securities transactions included conducting due diligence on behalf of investors, providing feedback and consulting with the offeror regarding investment returns, introducing investors to the offeror, recommending investments and acting as an intermediary between the offeror and the investors. FINRA also reported that Copeland co-managed one of the LLCs through a company that he jointly created and co-owned through another entity.
LPL Financial’s written supervisory procedures required registered representatives to provide written notice and receive written approval before engaging in any private securities transactions and prohibited them from directing clients to unapproved investments. Copeland violated these procedures by not notifying LPL and falsely attesting on annual compliance attestations that he did not solicit clients for unapproved investments.
Copeland also violated FINRA Rule 3280, which requires associated persons to provide written notice to their member firms before participating in any private securities transaction. A violation of Rule 3280 is also a violation of FINRA Rule 2010, which mandates that associated persons observe high standards of commercial honor.
Additionally, FINRA found that Copeland used unapproved communication channels, such as personal email accounts, text messages and online platforms, to communicate about securities-related business, including transactions offered through LPL and private securities transactions. Copeland allegedly sent more than 2,250 communications through the unapproved channels. Again, this was a violation of LPL’s written supervisory procedures, as well as FINRA Rule 4511, which requires member firms to maintain books and records as required under FINRA rules and the Securities Exchange Act of 1934.
Copeland accepted and consented to FINRA’s findings without admitting or denying them. As a result, Copeland has been barred from associating with any FINRA member in any capacity.
Copeland worked for Independent Advisor Alliance, or IAA, a Charlotte, N.C.-based, LPL-affiliated advisory firm, for roughly two years. LPL and IAA fired Copeland in 2023 for failure to disclose outside business activities, according to his BrokerCheck profile.
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