LPL Financial claims to be the biggest independent broker dealer in the United States. With tens of thousands of employees and registered reps, the company has its fair share of bad apples. But Dain Stokes, a recently canned LPL Financial broker, may get the prize for being the company’s biggest lowlife.
Stockbrokers that steal are nothing new. If the allegations against Stokes are true, however, he stole in the name of charity.
InvestmentNews reports that Stokes is facing an asset freeze after regulators say he solicited clients to invest in a phony African charity involving Taylor Swift.
According to New Hampshire Bureau of Securities,
“The Bureau alleges that, while employed as a financial advisor with LPL Financial, LLC and with an office in Bedford, NH, Stokes solicited a total of at least $576,000 from two former clients to purportedly invest in an African charity, claiming their investments would generate a 20% return. In addition to Taylor Swift’s personal involvement, Stokes also touted that, among other notable names, Bill Gates was involved in the African charity.
The Bureau has found no evidence to support Stokes’ claims that the African charity is credible. Rather, the Bureau believes Stokes misappropriated investor money by transferring their funds to multiple people and entities across the country while at the same time using some of the investors’ money for personal expenses.”
Allegedly, on August 1, 2019, one of Dain Stoke’s reported the incident to the Fremont (NH) Police. The customer says he invested $201,000 in a confidential investment.” The customer was able to turn over cancelled checks, unsecured promissory notes, and text messages to police. One text message said, “We are getting close, a week, maybe two, I just had a long talk with Taylor about it in the middle of the night lol.”
Two weeks later police say Stokes sent another text to his customer. This one said, “We need $30k this week to finish the project in Africa so we all get paid big, I can come up with $20k, but I’m $1 Ok short, so you have it? If not, no worries, but Taylor asked me to personally ask you, lol, she likes you! Let me know.”
And of course, when it came time to pay off on the investment, the victim says Stokes sent yet another text. He blamed Trump for the inability to repay. “Trump’s illegally locked my bank accounts, and I’m fighting it in the Federal Bank Commission in the New Hampshire AG’s Office. Taylor is releasing a new song on Instagram in 30 minutes and I’m promoting it.”
The police report says Stokes approached the customer and solicited an investment in an “outside project” in which Stokes was in charge of the “financial end of the project”. The customer wrote three separate checks.
New Hampshire has issued a cease and desist order against Stokes and ordered restitution in the amount of $201,000.
A check of records from the Financial Industry Regulatory Authority indicates LPL Financial terminated Stokes. He is not currently affiliated with any brokerage firm. He may be selling insurance, however. [We often find brokers who lose their license simply switch to insurance. Many states are cracking down on this practice but it still happens frequently.]
We looked at Stokes records to see if there was any other misconduct. FINRA says he has three prior customer complaints, all of which were denied. It does not appear that Stokes or his former employers were ordered to pay money on these claims.
Brokerage Firms Responsible for Actions of Rogue Brokers
How a broker with 21 years of experience thought he wouldn’t get caught is beyond us. What is more important to us, however, is making sure the customers are made whole.
Although New Hampshire ordered Stokes to pay restitution, we don’t believe he has the funds to do so. Crooks that steal money typically spend it. (Stokes has not been convicted of a crime, calling him a “crook” is merely our opinion. We have no idea if he pocketed any of the money and if he did, whether he still has any of the money left.)
Brokerage firms like LPL Financial can be held responsible for the actions of their brokers. When a stockbroker or investment adviser solicits an investment in a security or investment not sanctioned by his employer, the practice is called “selling away.” [We have cornerstone content on selling away and how to recognize the warning signs of this illegal practice.]
Brokerage firms have a legal obligation to supervise their brokers and know what they are doing. That is why you often here on calls to stockbrokers the message, “This call may be monitored or recorded for quality assurance.” Whether or not LPL was monitoring Stokes’ calls, we believe they are responsible for his actions.
LPL did the right thing by terminating Stokes. That doesn’t mean they are off the hook, however.
If you lose money in a phony investment scheme, contact us right away. Claims against brokerage firms are typically handled by binding arbitration and most can be completed in 14 months or less.
For more information about suing LPL, visit our LPL Financial fraud page. Want to see if you have a case against a stockbroker or investment adviser? Contact is online, by email or by phone 202-800-9791.
The stockbroker fraud lawyers at Mahany Law accept cases nationwide. Most cases are handled on a contingent fee basis meaning you only pay us if we win. Our practice is typically limited to claims of $1 million or more, however if you are close to that amount, we still may be able to help.
** Before we hear from the haters, there is obviously no evidence that Bill Gates or Taylor Swift were engaged in any fake charity.