The Securities Arbitration Law Firm of KlaymanToskes announced today that it is investigating claims on behalf of former customers of LPL and Jeffrey A. Cashmore. When registered with LPL from November 1994 through October 2012, Cashmore was based out of Williamsville, New York. In September of 2012, Cashmore entered into a Letter of Acceptance, Waiver and Consent (“AWC”) with FINRA, in which he was suspended from FINRA for one month, and fined $5,000.
According to FINRA, Cashmore prepared and distributed misleading sales literature to his customers and prospective customers. He also failed to retain copies of that sales literature. This conduct violated NASD Conduct Rules 2210(b)(2)(A), 2210(d)(1)(A), 2210(d)(1)(B) and 2110 and FINRA Rule 2010.
FINRA found that from at least January 2006 through at least December 2010 (“the relevant period”), Cashmore prepared or caused to be prepared, and delivered to his customers and prospective customers, “Power Optimizer” packages consisting of documents containing investment information and model portfolio recommendations. Those packages constituted sales literature as defined in NASD Conduct Rule 2210(a)(2). The packages typically consisted of a Power Optimizer Report, a Cash Flow Report, a Fee and Asset Summary Report, a Portfolio Recommendations/Asset Allocation page and Morningstar Reports for each mutual fund that Cashmore recommended. During the relevant period Cashmore provided Power Optimizer packages to at least 100 current and prospective clients.
The Power Optimizer packages, however, contained misleading information, FINRA stated. Specifically, the documents contained in the Power Optimizer package provided Cashmore’s customers with oversimplified and incomplete information, and failed to provide a sound basis for evaluating the facts with respect to the information contained in the package. For example, the Cash Flow Report contained a cash flow summary based on only one projected rate of return. Cashmore failed to provide alternate cash flow scenarios and never provided a cash flow illustrating a negative rate of return. Moreover, the Power Optimizer package failed to provide information necessary to properly understand several of the tables and charts contained in the presentation. By distributing misleading
sales literature, Cashmore violated NASD Conduct Rules 2110 (for conduct before December 15,2008) and 2210(d)(1)(A) and FINRA Rule 2010 (for conduct after December 14,2008).
FINRA added that in the Power Optimizer packages, Cashmore also provided numerous Morningstar reports, all of which addressed Class A share investments in various mutual funds. During the relevant period, however, Cashmore almost exclusively recommended and sold Class C share investments to his customers. Although Class A and C share investments in the same mutual fund are similar, they are distinct securities, with differing fees, surrender charges and rates of return. By producing and distributing to bis customers Morningstar reports for Class A mutual fund shares while recommending and selling the Class C shares of the same funds, Cashmore provided misleading sales literature to his customers and therefore violated NASD Conduct Rules 2110 (for conduct before December 15,2008) and 2210(d)(1)(B) and FINRA Rule 2010 (for conduct after December 14,2008).
Cashmore also caused LPL to fail to comply with recordkeeping requirements, according to FINRA. Specifically, during the relevant period, Cashmore did not retain a complete copy of the Power Optimizer packages sent to current and prospective customers. By causing the firm to fail to maintain copies of the sales literature Cashmore violated NASD Conduct Rules 2110 (for conduct before December 15, 2008) and 2210(b)(2)(A) and FINRA Rule 2010 (for conduct after December 14, 2008).
Former customers of Cashmore are encouraged to contact our law firm to explore their legal rights and options. KlaymanToskes, an experienced, qualified and nationally recognized securities litigation law firm, practices exclusively in the field of securities arbitration and litigation. It continues its representation of investors throughout the world in securities arbitration and litigation matters against major Wall Street brokerage firms.