A former Charles Schwab advisor has been suspended for two years and ordered to pay nearly $96,000 in fines and disgorgement after regulators alleged he engaged in unauthorized trading and an illicit profit-sharing agreement with a client who was also a family member.
Daniel Roper, who joined Schwab in 2019 after beginning his advisory career with Bancwest Investment Services in 2017, reached a settlement with the Financial Industry Regulatory Authority (Finra) that includes a $15,000 fine and disgorgement of $80,850. The case was resolved without an admission or denial of the alleged misconduct. Roper has not registered with another broker-dealer since leaving Schwab in 2023.
According to Finra’s findings, Roper executed over 20,000 trades in the client’s Schwab account between October 2020 and January 2022—including approximately 14,000 equity trades and 6,300 options trades—despite not having written discretionary authority. The account in question was classified as self-directed, and Schwab had not approved it for discretionary trading.
Roper allegedly operated the account using the client’s login credentials and made trading decisions independently, despite only having verbal authorization. Finra contends that the volume and nature of the trades constituted excessive and unsuitable activity. According to the complaint filed by the client, Roper’s trading resulted in significant losses.
Compounding the alleged misconduct, Roper is accused of accepting a share of the profits from certain trades that were successful, with those payments routed through an external account to avoid detection. These actions amount to an illicit profit-sharing arrangement, which is explicitly prohibited under industry rules without proper disclosure and firm approval.
Further, Finra alleges that Roper used unauthorized communication channels—specifically personal text messages and email accounts—to correspond with the client, a violation of Schwab’s policies requiring approved, monitored platforms for client communication. Regulators say this concealed the nature and extent of the arrangement from Schwab’s compliance personnel.
Schwab terminated Roper after the firm received the client’s complaint in 2023. “At Schwab, we hold ourselves to the highest standards of ethical conduct. The actions of this former representative fell short of those expectations,” a spokesperson for the firm said in a statement.
For RIAs and broker-dealers, this case underscores ongoing compliance risks associated with discretionary trading authority, communication protocols, and outside compensation arrangements—even when dealing with family members. Finra rules are unambiguous: written client authorization and firm approval are required for discretionary control, and any form of compensation-sharing must be fully disclosed and documented.
The use of personal devices or unauthorized apps for client communications remains a growing enforcement focus for regulators, particularly when it hampers a firm’s ability to supervise its advisors effectively. In Roper’s case, thousands of off-channel communications were exchanged—raising red flags about the firm’s ability to monitor risk and ensure adherence to internal controls.
While the client relationship in question involved a family member, Finra's enforcement action highlights that personal ties do not absolve advisors of their regulatory duties. In fact, such relationships can introduce additional scrutiny if they result in informal arrangements that bypass firm procedures.
Advisors and firm leaders should take this case as a reminder of the importance of reaffirming supervisory systems and conducting regular training to prevent unauthorized discretionary activity, off-platform communication, and undisclosed compensation arrangements. For compliance officers and branch managers, enhancing trade surveillance, flagging high-frequency trading in client accounts, and ensuring written discretionary agreements are in place are all critical safeguards.
Roper’s case also highlights potential legal and reputational risks when advisors use client credentials to access accounts, which violates basic cybersecurity and custodial policies. Regardless of client consent, this practice creates significant vulnerability for firms and may trigger broader enforcement action.
Advisors looking to operate within the boundaries of compliance must ensure that all client interactions—especially involving discretionary management or compensation—are formally documented and approved by the firm. Anything less risks regulatory sanctions, legal exposure, and professional suspension.
