Scammer Poses as Financial Advisor — Court Says Firm Not Liable

Financial advisory firm owes no duty to non-customers to warn of third party's fraudulent conduct.The Fourth Appellate District affirmed summary judgment for Lifetime Financial, Inc., holding the firm had no legal duty to warn non-customers about an imposter posing as one of its advisors. Mark Harding lost over $300,000 to a scammer impersonating investment advisor Daniel Corey Payne and sued Lifetime for negligence, arguing the firm should have posted warnings online or notified FINRA after receiving prior complaints about the imposter. However, the court found no fiduciary relationship between Harding and the firm, and no duty under FINRA Rule 4530, which only requires reporting when a written complaint alleges misconduct by the firm or its representatives from a person with whom the firm had engaged or sought to engage in securities business. Because Harding was not a customer and the imposter was an unaffiliated third party, Lifetime had no duty to act.