Broker Investigation: Lloyd Thomas Layton

Lloyd Thomas Layton (CRD#: 1618414) is a registered broker and investment advisor. Since 2015, Mr. Layton has been employed at Wells Fargo Clearing Services in Washington, DC. Previously, Mr. Layton was associated with Morgan Stanley (2009 to 2015), also in Washington, DC.

On August 13th, 2018, FINRA suspended Lloyd Thomas Layton for three months for making unsuitable investment recommendations while he was at Morgan Stanley. Without admitting or denying wrongdoing, Mr. Layton consented to this suspension.

FINRA Sanctions: Former Morgan Stanley Broker Lloyd Thomas Layton

From 2012 to 2015, while he was at  Morgan Stanley, FINRA alleges that Mr. Layton engaged in an unsuitable pattern of trading Unit Investment Trusts (UITs) in his clients’ accounts. At least 54 customer accounts were affected by this misconduct.

According to the findings, Mr. Layton repeatedly advised customers to sell UITs prior to their maturity date. In most cases, Mr. Layton’s customers were sold UITs that had a maturity date of 24 months to 36 months. Yet, the average holding date on the affected accounts was only 265 days. The early surrender of these investments resulted in Mr. Layton’s customers paying wholly unnecessary fees.

According to FINRA, Mr. Layton’s goal was primarily to generate additional commissions for himself. In other words, FINRA alleges that he ‘churned’ his customer’s accounts. This violates FINRA’s suitability rule. Mr. Layton has consented to the three-month suspension (September 17th, 2018 – December 16th, 2018) and he has agreed to pay a $5,000 civil penalty.

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