According to FINRA, Frank E. Lumpuy of Miami, Florida was assessed a deferred fine of $5,000 and suspended from association with any FINRA member in all capacities for two months for engaging in outside business activities without complete and accurate disclosure to his member firm.

Lumpuy disclosed to his firm that he was a passive investor in two real estate investment companies. However, without providing notice or receiving approval, he actually worked as an owner-manager for these companies—a much more active role than disclosed.

As owner-manager, Lumpuy managed rental properties, negotiated leases, signed annual corporate filings, and facilitated communications between company members, counsel, and investors. These activities went far beyond passive investment.

Lumpuy inaccurately affirmed on multiple annual compliance questionnaires that he was fully in compliance with firm policies. When the firm specifically asked whether any firm customers were investors in the companies, Lumpuy failed to disclose that one of his customers had been an investor for approximately two years.

The involvement of a firm customer in Lumpuy's outside business creates a conflict of interest that the firm should have been aware of. When brokers have financial relationships with customers outside the brokerage relationship, it can influence their recommendations and advice.

The distinction between passive investor and active manager is significant. Passive investment generally requires less scrutiny, while active management roles require fuller disclosure so firms can evaluate potential conflicts and time commitments.

The suspension was in effect from May 5 through July 4, 2025.

For investors, always ask your broker about their outside business activities and consider how those activities might affect the advice you receive.