Richard Sandru Investigation-former broker with LPL Financial & Cambridge Investment Research

Rex Securities Law Investigates Richard Sandru
on Behalf of  Group of Former Clients



August 2013Update-SEC Issues Order Making Findings and Imposing Sanctions by Default against Sandru

On August 12, 2013, a final order was entered against Richard P. Sandru by the SEC making findings and imposing sanctions. The order may be viewed here. Sandru did not defend the Order Instituting Proceedings (OIP), filed in April 2013 (see below)  and was held in default for failing to respond or otherwise defend.

The SEC made numerous findings of fact , including the following:

  • Sandru joined Cambridge Investment Research Advisors, Inc. in July 2009 where he supervised two other Cambridge representatives. By the time he left Cambridge in April 2011, he was managing, on a discretionary basis, about $47 million in assets for about 180 clients.
  • Sandru executed two schemes to defraud his clients. From December 2009-March 2011 he misappropriated at least $308,850 in purported "financial planning" fees from at least 47 clients, by forging their signatures or adding costs to engagement agreements after the clients had already signed them. Sandru failed to provide the promised financial planning services. These fees ranged from $500 to $5,000 and Cambridge paid 91% of these unauthorized fees by Cambridge.
  • Sandru's second fraudulent scheme involved the misrepresentation of account balances. Beginning in at least 2008 (while Sandru worked for LPL Financial according to FINRA records) he lost money through trading in some client's accounts. Sandru had told some of these clients, several of whom were elderly and retired, that they would be able to take substantial monthly withdrawals from their accounts for the rest of their lives or at least for many years. While at Cambridge, to conceal these losses, Sandru falsely represented to at least 6 clients, orally and in writing, that the account balances on the Cambridge statements were inaccurate and that they had other separate or "guaranteed " accounts containing additional funds.
  • Sandru made these false misrepresentations to clients in order to induce them to allow him to trade their accounts and collect advisory fees from their dwindling account balances. Clients, relying on Sandru's representations and encouragement, continued to make large monthly withdrawals, which further depleted their accounts.
  • Sandru liquidated securities, including money market funds in his clients' accounts to cover the monthly withdrawals he had recommended. When certain client's funds were completely exhausted, Sandru paid distributions our of his own pocket in an attempt to prevent discovery of his fraudulent schemes.
  • During the SEC investigation, Sandru refused to answer any questions, invoking his Fifth Amendment privilege against self incrimination.


Not surprisingly the SEC permanently barred Sandru from the industry, ordered disgorgement and interest of nearly $400,000 as well as a civil penalty of $361,000. Given Sandru's financial condition it is doubtful whether the disgorgement and penalty will ever be collected.

Former clients who were victims of Sandru's fraudulent schemes have various legal options, including FINRA arbitration.


April 2013 Update-SEC Order Instituting Proceedings (OIP)  Filed Against Sandru

See bottom of the page for information on our ongoing investigation of Sandru/LPL Financial  which began in summer 2012.


On April 8, 2013, the Securities and Exchange Commission (SEC) announced the issuance of an Order Instituting Administrative and Cease And Desist Proceedings Pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 and other statutory violations against Richard P. Sandru. View the Order.

The SEC Order alleges that from at least December 2009 through March 2011, while associated with Cambridge Investment Research Advisors, Inc. (Cambridge), Sandru misappropriated at least $308,850 in purported financial planning fees from at least 47 clients.  During this same period Sandru misrepresented the actual values of customer accounts to certain clients to conceal the diminishing value of the accounts in order to allow him to continue to purchase and sell securities in the accounts and to collect advisory fees.

Sandru, who worked for LPL Financial prior to his stint at Cambridge also conducted business under the name Sandru Financial Group and Reizen Wealth Management, was associated with Cambridge from July 1, 2009 until April 29, 2011 and worked in the Perrysburg, Ohio branch office.

The SEC order also alleges that Sandru:
  • forged signatures or added costs to Financial Planning Engagement agreements after the clients signed them and without his client's knowledge or permission
  • failed to provide financial planning services as described in the agreements
  • submitted the forged documents to Cambridge's accounting office who paid Sandru 91% of the financial planning fees
  • collected financial planning fees ranging from $500 to $5,000 per agreement
  • charged some clients four or five times over several months for unauthorized and unperformed financial planning services
  • Beginning in 2008 while Sandru was associated with another broker dealer ( Sandru was LPL Financial from 9/2002-6/2009 according to FINRA records) Sandru lost money through his trading in several client accounts and told some of these elderly and/or retired clients that they would be able to make substantial withdrawals from their accounts for the rest of their lives or at least for many years
  • went as far as to pay monthly distributions to clients after their funds were exhausted to conceal his scheme
A hearing has been scheduled before an Administrative Law Judge to provide Sandru the opportunity to respond, to determine if the allegations are true and whether remedial actions or other relief is appropriate.

Summer 2012 Investigation of Sandru 
In
March 2012 FINRA disciplinary  announced that Sandru has been barred from association with any FINRA  member. Here is the excerpt on Sandru's exit from the industry (see page 39)      from the FINRA website:

Richard Patrick Sandru (CRD #2470082, Registered Principal, Fort Myers, Florida) submitted
a Letter of Acceptance, Waiver and Consent in which he was barred from association with
any FINRA member in any capacity. Without admitting or denying the findings, Sandru
consented to the described sanction and to the entry of findings that he caused financial
planning forms for investment advisory customers to be submitted to the corporate
accounting office that services his member firm and its investment advisor affiliate without
the customers’ knowledge or authorization, and without providing the financial planning
services described in the forms so that the customers were improperly charged fees
ranging from $500 to $5,000 per financial plan. The findings stated that Sandru generated
approximately $321,350 in unauthorized financial planning fees, which he converted
for his personal benefit; Sandru received approximately $292,428.50 in accordance with
his payout. The findings also stated that Sandru failed to respond to FINRA requests for
information and documents and, through counsel, notified FINRA that he would not
respond to any requests for information.

We presently represent a group (approximately 30 individuals)  of Sandru's former clients who are seeking losses from LPL Financial and the other firms where Sandru was registered. These individuals, nearly all of whom are retired, live in in  Ohio and other states. We would appreciate hearing from anyone who has any information that may be helpful to our investigation. A review of Sandru's CRD on the FINRA BrokerCheck Website, reveals the following:

  • 4/1/2011-8/30/2011: Sandru worked for Sun Shine Investment Consultants, LLC. Ft. Meyers, FL.
  • 7/1/2009-4/29/2011: Sandru worked for Cambridge Investment Research Advisors, Inc. & Cambridge Investment Research, Inc. He was terminated for failing to inform the firm about a customer issue in accordance with firm policy. Fairfield, IA.
  • 9/20/2002-6/29/2009: Sandru worked for LPL Financial Corporation. He was permitted to resign for attempting to resolve customer concerns without approval from the company, in violation of firm policy.Perrysburg, OH.
  • Customer complaint that Sandru created a user name and password for their account and made unauthorized withdrawals. Damages sought are $945,000.
  • Customer complaint seeking damages of $96,219 for sale of BP ADRS and other investments.
  • Customer complaint in connection with Maumee Authority Stamping.
  • IRS Lien for $89,000 in 2007 for payroll taxes , paid off in 2009.
  • Customer complaint for $18,280 for losses and reimbursement of advisory fees.


If you have information relative to this investigation or have suffered losses in an account handled by Richard Sandru, please contact us. Robert H. Rex, Esq. been helping investors recover investment losses for over twenty years. We represent clients nationwide.
No charge for initial consultation.

Call us at 561 391 1900 to speak with an experience securities lawyer about your legal rights.

Visit our website or blog for more information about FINRA arbitration.

 

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Robert H. Rex
Rex Securities Law
Dickenson Murphy Rex & Sloan
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