Betz Law PLLC Investigates Alleged Securities Law Violations: Waddell & Reed "MAPLatitude" advisory accounts, LPL "Strategic Asset Management" advisory accounts, and P. Alison Fleming, CFP (CRD No. 1960175) Under Scrutiny

Key Takeaways:

• FINRA arbitration filed against LPL, Waddell & Reed, and P. Alison Fleming (CRD No.1960175)
• Allegations include reverse churning, unsuitable investments, and overconcentration in high-yield closed-end funds and exchange traded products 
• Legal causes of action include alleged violations of the 1940 Investment Advisers Act, 1934 Securities Exhange Act, 
• Investigation follows 2022 SEC action against Waddell & Reed's wrap fee program, implicating LPL in remediation efforts

Betz Law PLLC, a leading investment fraud and securities arbitration practice dedicated to investor protection and advocating for the rights of individual and institutional investors, has initiated a FINRA arbitration against LPL Financial, Waddell & Reed, and financial advisor P. Alison Fleming, CFP (CRD No. 1960175). This action stems from alleged investment losses suffered by a retired client, raising significant concerns about investment suitability, potential violations of securities laws, and the effectiveness of regulatory remediation efforts.

The Client's Story: A Retiree's Investment Gone Wrong

At the heart of this case is a 69-year-old retired home inspector who is nearing his 70th birthday. In October 2019, he entrusted his $395,000 inheritance to Waddell and Fleming, seeking a secure financial future. His stated goals were clear:

• Generate modest income
• Achieve moderate growth
• Avoid high-risk or speculative investments

Despite these objectives, the client alleges that his portfolio was managed in a manner grossly inconsistent with his risk tolerance and financial needs.

Alleged Misconduct: A Closer Look

The FINRA claim outlines several serious allegations against the respondents:

1. Unsuitable Investments: P. Alison Fleming, CFP (CRD No. 1960175) allegedly invested and overconcentrated the client's inheritance in aggressive, high-yield closed-end funds and exchange-traded products, contradicting the client's moderate risk profile.
2. Misuse of Wrap Accounts: The client's funds were placed in Waddell & Reed's MAPLatitude wrap account program, which later came under SEC scrutiny for potential reverse churning.
3. Inadequate Management: Despite charging a 1% management fee, Fleming and her team at Lumena Financial Strategies allegedly provided minimal active management of the account, employing a "set-it and forget-it" approach.
4. Failure to Act in Client's Best Interest: Waddell, LPL, and Fleming are accused of prioritizing their own financial interests over the client's well-being, potentially violating their fiduciary duty.
5. Lack of Disclosure: The client alleges that he was not adequately informed about the risks associated with the recommended investments or the fees involved in Waddell's "MAPLatitude" and LPL's "Strategic Asset Managment" advisory accounts.

Legal Issues Under Investigation: From Reverse Churning to Elder Financial Exploitation

Betz Law's comprehensive investigation into alleged misconduct by LPL Financial, Waddell & Reed, and Patricia Alison Fleming, CFP (CRD# 1960175) covers a wide range of potential securities law violations, focusing on the following key areas:

• Reverse Churning in Wrap Fee Accounts: Betz Law is examining whether clients were charged excessive fees for minimal trading activity, particularly in accounts transferred from Waddell & Reed to LPL Financial in 2021.
• Regulation Best Interest (Reg BI) Violations: Betz Law's investigation assesses whether investment recommendations were suitable and truly in the client's best interest, as required by Reg BI.
• Breaches of the Investment Advisers Act of 1940: Betz Law is evaluating potential violations of this cornerstone legislation, including failures in fiduciary duty and disclosure obligations.
• Violations of the Securities Exchange Act of 1934: Betz Law is scrutinizing transactions for potential fraudulent practices prohibited under this act.
• Elder Financial Exploitation: Given our client's age, we're investigating possible violations of laws designed to protect senior investors, including South Carolina's Elder Financial Exploitation statute.
• Unsuitable Investment Recommendations: Betz Law is examining whether high-risk investments were inappropriately recommended to retirees with conservative/moderate investment goals.
• Failure to Disclose Material Information: Betz Law's investigation includes allegations that critical information about investment risks and fees was not adequately disclosed to clients.
• Breach of Fiduciary Duty: Betz Law is assessing whether the LPL, Waddell, and Fleming failed to act in their clients' best interests, a fundamental obligation in the financial advisory relationship.
• Inadequate Supervision and Compliance: Betz Law's inquiry extends to whether LPL and Waddell & Reed maintained proper oversight of their representatives and ensured regulatory compliance.

This multi-faceted investigation aims to uncover any and all potential violations that may have harmed investors, particularly retirees and senior citizens. If you've experienced similar issues with your investments, contact Betz Law for a confidential consultation.

Regulatory Context: SEC Actions and LPL's Responsibilities

This case takes on added significance in light of recent regulatory actions:

SEC's 2022 Action Against Waddell & Reed

In September 2022, the SEC issued a cease-and-desist order against Waddell & Reed concerning their "MAPLatitude" wrap fee program. The SEC's order alleged that:

• 737 client accounts should have been converted from wrap fee to brokerage accounts due to infrequent trading
• Clients paid $484,645 in unnecessary fees
• Waddell & Reed failed to take reasonable steps to address these issues between January 2015 and July 2021

LPL's Role and Responsibilities

LPL Financial, which acquired Waddell & Reed in 2021, played a crucial role in settling these issues with the SEC:

1. Settlement Participation: LPL was involved in resolving the SEC's charges related to Waddell & Reed's MAPLatitude program.
2. Remediation Obligation: As part of the settlement, LPL agreed to a distribution of funds to affected clients, taking on the responsibility to identify and compensate those harmed by the reverse churning practices.
3. Ongoing Compliance Duty: LPL assumed the obligation to address and rectify the compliance issues inherited from Waddell & Reed, including implementing stronger oversight measures to prevent future violations.
4. Client Protection Responsibility: The settlement underscored LPL's duty to protect the interests of former Waddell & Reed clients transferred to LPL, including identifying accounts that may have been overlooked in the initial SEC action.

Implications for Current Investigation

These regulatory actions raise critical questions in Betz Law's current investigation:

• Did LPL adequately identify all affected accounts, including our client's, in its remediation efforts?
• Were appropriate steps taken to convert unsuitable wrap fee accounts to more appropriate account types?
• Has LPL implemented sufficient measures to prevent ongoing reverse churning issues in transferred accounts?

Who May Be Affected?

This investigation may be relevant to you if:

• You were a Waddell & Reed client whose "MAPLatitude" account transferred to LPL Financial in 2021 and converted into an LPL "Strategic Asset Management" advisory account
• You have or had a fee-based account at Waddell or LPL (e.g., Waddell's MAPLatitude or LPL's Strategic Asset Management advisory programs)
• You've experienced unexpected losses or have concerns about account fees
• You're a senior investor who feels your investment needs may have been mismanaged
• You received investment advice from P. Alison Fleming, CFP, or Lumena Financial Strategies

How Betz Law PLLC Can Help

If you believe you may have been affected by similar issues, Betz Law offers:

• Free, confidential case evaluations
• Extensive experience in securities litigation and FINRA arbitrations
• Extensive in-house wealth and investment management litigation and regulatory expertise now being leveraged on behalf of individual and institutional investors
• Cutting-edge legal strategies enhanced by AI technology

About Betz Law: Innovative Advocacy for Investors

Betz Law PLLC, based in Charlotte, North Carolina, combines decades of securities industry expertise with innovative legal technology to provide powerful advocacy for investors nationwide. Led by attorney Demian Betz, the Firm brings a unique "Trial Ready" approach to every case, maximizing client recoveries through meticulous preparation and strategic negotiation.

Meet Attorney Demian Betz

With over 20 years of experience in complex financial services litigation, Demian Betz brings unparalleled expertise to every case:

• Former Assistant General Counsel at Wachovia Corporation
• Former Vice President and Senior Counsel at Wells Fargo & Company
• 45 cases tried to conclusion before FINRA arbitration panels nationwide
• Overseen resolution of 700+ financial services disputes

Demian's insider perspective and trial-ready philosophy position Betz Law to take on even the most complex financial services disputes with unmatched efficiency and effectiveness.

Take Action: Protect Your Financial Future

If you've experienced investment losses or have concerns about the management of your accounts, don't wait to seek help. Betz Law Firm is ready to review your case and provide the experienced, innovative legal representation you deserve.

Contact Betz Law PLLC Today

Take the first step towards protecting your financial interests. Contact Betz Law for a free, confidential consultation. Let Betz Law's experience and innovative approach work for you.

Call Now: 704-343-1546

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www.betzlawpllc.com

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Don't let potential securities law violations compromise your financial security. Reach out to Betz Law today and get the skilled legal advocacy you need to protect your rights and pursue the compensation you deserve.

Disclaimer: This post is for informational purposes only and does not constitute legal advice. The investigation is ongoing, and allegations have not been proven in court or arbitration. Betz Law will update this information as the case progresses.