Oil Entrepreneur Sues Wells Fargo and LPL For Mismanaging Securities-Based Loan Strategy

Posted on March 10th, 2023 at 2:22 PM
Oil Entrepreneur Sues Wells Fargo and LPL For Mismanaging Securities-Based Loan Strategy

From the Desk of Jim Eccleston at Eccleston Law

An oil refinery entrepreneur has filed suit against Wells Fargo Advisors and LPL Financial alleging that his advisor overleveraged his account with a $5 million securities-based loan as part of a strategy that failed amidst the Covid-19 pandemic.

The complaint accuses the former advisor, John Dougherty, as well as LPL and Wells Fargo of breach of fiduciary duty and breach of contract. According to the complaint, Dougherty allegedly convinced the client in 2013 to obtain a $5 million loan to cover taxes and other obligations following the sale of his Alabama-based business, Warrior Asphalt, Inc., for a $9.5 million profit. Dougherty claimed that the loan would permit the client to generate income from the full proceeds to cover living costs and interest. However, the loan allowed Dougherty to charge management fees on the gross investment while also obtaining credit for interest payments on the loan, which exposed the client to greater market risk. Dougherty never recommended paying off the loan, even though the client’s account required at least a 3.5% return merely to pay the annual advisory fee and interest on the account.

The strategy ultimately failed in March 2020 at the outset of the pandemic as Dougherty began selling off most of the client’s equity securities to protect himself and Wells from losing their collateral on the loan, according to the complaint. Dougherty departed for LPL in January 2021. LPL failed to conduct due diligence on the advisor’s accounts and additionally ratified Dougherty’s problematic strategy in an effort to “continue recovering substantial fees”, according to the suit.

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.

Tags: Eccleston, Eccleston Law

Return to Archive

TESTIMONIALS

Previous
Next

You are the best attorneys in the country.

CC

LATEST NEWS AND ARTICLES

October 29, 2025
FINRA Foundation Study Reveals Alarming Investor Susceptibility to Fraudulent Offers

The FINRA Investor Education Foundation (FINRA Foundation) has released preliminary findings from its upcoming report, Investors in the United States: A Report of the National Financial Capability Study.

October 28, 2025
UBS Seeks Court Order Against $1.4 Billion Florida Advisory Team Over Client Solicitation Allegations

UBS Wealth Management USA has filed a lawsuit and requested a temporary restraining order (TRO) against a $1.4 billion advisory team that recently departed to join Elevation Point, a West Palm Beach-based registered investment advisor launched just 15 months ago.

October 27, 2025
FINRA Panel Orders Charles Schwab to Pay Damages Over Structured Product Losses Sold by Vora Wealth Management

A three-person FINRA arbitration panel ordered Charles Schwab & Co. to pay $165,440 in compensatory damages to a former client of Vora Wealth Management, after losses tied to complex structured products.