FINRA has barred a Houston financial adviser after he refused to provide information and documents during an investigation into suspected misappropriation of client funds and undisclosed outside business activities. The October 1, 2026 action followed a client lawsuit alleging that the adviser diverted more than $2.3 million for personal and business expenses.
Client Funds Allegedly Used for Family Expenses and a Startup
According to the lawsuit, the client received approximately $7 million following a workplace accident that left him with a brain injury and cognitive impairment. The client alleges that the adviser exploited his vulnerability and diverted funds between 2023 and 2025.
The lawsuit alleges that the adviser and members of his family used the client’s money for:
- Home improvements
- Personal spending
- A family member’s wedding
- A healthcare startup the adviser founded
The client also claims the adviser created shell companies to make it appear the funds were being invested. Bank records for one of those entities allegedly showed personal and household spending rather than investment activity.
The lawsuit names the adviser, his business, his former broker-dealer, several family members, and the startup as defendants.
Undisclosed Activities and Power of Attorney Raise Concerns
The adviser’s broker-dealer terminated him in October 2025 after receiving the lawsuit. Its termination disclosure cited allegations of misappropriation, acting as the client’s power of attorney without firm consent, and establishing undisclosed outside businesses.
FINRA’s investigation originated from its review of the firm’s termination filing. The adviser consented to the bar without admitting or denying FINRA’s findings. The bar addressed his refusal to cooperate; the client’s misappropriation allegations remain pending in civil litigation.
What Compliance Teams Can Take Away
The circumstances highlight several areas firms can review within their own supervisory programs:
- Outside business disclosures: Use questionnaires, audits, and supervisory reviews to identify undisclosed activities.
- Positions of trust: Reinforce disclosure and review procedures for powers of attorney and similar arrangements.
- Vulnerable client protection: Train employees to flag unusual transfers and signs of financial exploitation.
For compliance teams, these allegations illustrate why disclosures, client protection training, and supervisory follow-up need to work together. Collecting information is only the starting point; unusual relationships and inconsistencies warrant further review.
