Scott Patrick Klor of Midlothian, Texas submitted a Letter of Acceptance, Waiver, and Consent (AWC) to the Financial Industry Regulatory Authority (FINRA) in which he was fined and suspended for allegedly engaging in unapproved private transactions in violation of NASD Rule 3040 and FINRA Rule 2010.
In March 2011, Scott Patrick Klor registered with LPL Financial LLC as a General Securities Representative and General Securities Principal. According to FINRA , Klor solicited investors, including some of his firm customers, to form an LLC to purchase a variable life insurance policy for $1.4 million on the life of an elderly individual with a terminal illness. The findings stated that the transaction was structured as a viatical settlement and Klor did not notify his firm of his involvement. FINRA stated that Klor used his Firm email account to communicate with investors and received a four-percent interest in the LLC. According to FINRA, when the insured passed away the death benefit on the policy was worth less than invested and the investors who owned 90 percent of the LLC lost over $200,000. Additionally, Klor allegedly made false statements on the Firm’s annual compliance questionnaires when asked whether he had ever participated in a viatical settlement. Continue Reading