Tuesday, September 25, 2012

Dan Puplava fined, broker's license suspended, but SDCOE still loves him

Dan Puplava and Diane Crosier had their pal Dan Shinoff sue for defamation when Puplava's dealings were exposed by Jeff McDonald of the San Diego Union-Tribune in 2009. Their target settled because he didn't have enough money to pay lawyers to carry on the lawsuit. I assume that was the plan all along, since I doubt that Puplava and Crosier wanted a trial where the whole truth might come out.

Regulators also imposed a $300,000 fine on Puplava’s broker-dealer, AIG Financial Advisors, now known as SagePoint Financial Inc.

See all Dan Puplava posts.

Office of Ed manager was fined, suspended
FINRA found issues with his side business
By Jeff McDonald
May 18, 2012

The official in charge of a $270 million public investment fund for 6,400 educators in the region was fined $7,000 last year and had his broker’s license suspended for three months. He retained his official post.

Daniel Puplava, 50, manages the deferred compensation program for the San Diego County Office of Education. He has simultaneously worked for private brokerage firms, one of which was fined $300,000 in January for failing to supervise him and guard against conflicts of interest.

The fines were issued by the Financial Industry Regulatory Authority, the nonprofit regulatory agency that was reviewing the matter when the U-T wrote about Puplava’s dual roles in 2009.

At the time, Puplava worked for AIG Financial Advisors of Phoenix. He now works for his brother’s company, Puplava Financial Services of San Diego.

In his county schools job, Puplava meets hundreds of potential investors while hosting retirement workshops aimed at growing the deferred compensation program. He said in written responses to questions that he does not refer participants in the county program to his brother’s firm.

“I do not speak of or mention Puplava Financial Services at my presentations,” he wrote. “In addition, the (county schools office) has policy rules and practices that have been put into place that must be followed. If I violate the rules there would be consequences.”

Puplava is paid $108,696 a year by the schools office to run the deferred compensation program, which offers securities, annuities and other investments to educators seeking to boost their retirement beyond government pensions.

The Office of Education said it was aware of the investigation findings and penalties but could not discuss the case in any detail due to confidentiality requirements for agency personnel.

“Mr. Puplava is no longer in a supervisory position and this behavior is not acceptable to SDCOE under SDCOE policy or practice,” the office said in a statement.

Puplava’s pay remained the same when he was removed from a supervisory position, the office said.

Puplava’s dual positions were first reported by the U-T in 2009. The newspaper obtained client statements listing Puplava’s county telephone number as his primary contact for his private investment sales.

The paper documented that Puplava earned $355,000 in commissions in 2006 and was named to the 2008 Achiever’s Council, an honor reserved for agents of AIG Financial Advisors whose commissions and fees exceed $250,000 a year.

County schools officials defended their decision to permit Puplava to run his outside business, saying it was a viable company when Puplava agreed to run the deferred compensation program and there was NO need for him to give up that business.

Still, the Financial Industry Regulatory Authority looked into the matter.

Puplava was not penalized for having conflicts of interest between his public-sector job and his personal brokerage business.

Instead, FINRA said Puplava failed to properly supervise a signature stamp that was being used by an assistant. He also kept blank forms signed by his clients, which is not permitted.

“Puplava had customers sign blank securities business-related forms and retained these blank securities business-related forms in his customer files,” FINRA said. “Puplava was aware of his member firm’s prohibition against this practice.”

Puplava said he would have prevailed in the case but admitted the allegations to minimize his legal expenses.

“I was informed by my attorney that I had an excellent chance of defeating any FINRA claims, but the cost would be prohibitive,” Puplava wrote. “Therefore, I settled with FINRA.”

Puplava, who said he shared his commissions with other brokers, accepted the $7,000 fine and two suspensions late last year — one for 20 days and one for three months. The longer suspension was satisfied in January.

The full-time county schools job requires Puplava to hold a broker’s license. Office of Education spokesman James Esterbrooks said Puplava avoided duties that required a license during his suspensions.

“He was in the office doing paperwork,” Esterbrooks said.

Regulators also imposed a $300,000 fine on Puplava’s broker-dealer, AIG Financial Advisors, now known as SagePoint Financial Inc.

“The firm failed to implement a supervisory system reasonably designed to address any conflicts of interest,” investigators from FINRA wrote in their published findings.

In response to questions from The Watchdog, a spokeswoman for the company said, “The protection of our clients’ assets is paramount to SagePoint Financial. Mr. Puplava has not been affiliated with SagePoint Financial since January 2010.”

1 comment:

Cxgllc said...

Great info... Thanks for sharing.

FINRA Series 24