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LPL's Donald Padilla Suspended for Circumventing Firm Supervision, Unapproved Email Accounts

FINRA suspended Alhambra, California broker Donald George Padilla for using unapproved e-mail accounts to communicate with customers, thus circumventing LPL Financial's supervision and FINRA recordkeeping rules. Despite Padilla's disclosed separation from LPL while under investigation for misconduct, Kestra Investment Services nonetheless hired him, only for Kestra to find itself in arbitration with Padilla for further alleged misconduct.

Donald Padilla (CRD #3053711) joined LPL Financial in 2011 and purportedly set up unapproved e-mail accounts to correspond with LPL customers regarding securities business in contravention of industry rules, and furthermore hid the e-mail accounts from LPL during branch audits, according to AWC #2015048141902.

Despite LPL Financial filing an "employment separation after allegations" disclosure in November 2015 and writing of the unapproved e-mail address investigation as well as removal/concealment of e-mails from LPL supervisors or investigators, Kestra Investment Services nonetheless hired Padilla before discharging him in March of 2018 for "failure to follow firm policy, specifically in relation to correspondence requirements and marketing designations."

Remarkably, despite two firms parting ways with Padilla over similar alleged failures to follow firm policy, the Alhambra, CA branch of National Securities Corporation hired Padilla in April 2018, where he remained for five months before his registration terminated at that firm, as well, while FINRA opened its investigation into Padilla.

In January 2020, FINRA suspended Padilla for "failure to comply with an arbitration award or settlement agreement." Several charges listed in the award from FINRA's Los Angeles office included breach of a promissory note, breach of written contract, and unjust enrichment.

The firm associated with the arbitration award was Kestra Investment Services, the very firm that hired Padilla after he previously left broker-dealer LPL Financial for violating the latter brokerage's rules.

In 2013, former Texas Commissioner Denise Crawford spoke of securities industry issues and stated, "The problem is that the small minority of bad brokers—and brokerage firms—does a tremendous amount of damage." We wrote of so-called cockroach brokers, or stockbrokers who leave a firm under a cloud of misconduct while matriculating to another firm where the representative engages in further misdeeds.

In the case of Padilla, jumping ship from LPL Financial while under investigation may have ended up harming his new firm Kestra, as evidenced by the aforementioned arbitration award based on allegations similar to that surrounding his departure from LPL.

If you have invested with former LPL Financial, Kestra Investment Services, and National Securities Corp. broker Donald G Padilla of Alhambra, California, or with any investment adviser or registered representative whose off-the-record e-mails or communications outside of the scope of a firm's supervision contributed to financially harmful transactions or losses exacerbated by the firm's inability to supervise its broker, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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