Securities Lawyers Blog
The investment fraud lawyers of Gana Weinstein LLP are investigating the employment termination filed with The Financial Industry Regulatory Authority (FINRA) by Woodbury Financial Services, Inc. (Woodbury Financial) involving broker David Ross (Ross). According to BrokerCheck records Ross is subject to one customer complaint, one employment separation for cause, and six judgment or liens.
According to Woodbury Financial, the firm terminated Ross after alleging Ross failed to disclose an outside business activity (OBA) and accepted loans form a client in addition to violating other firm policies and procedures. Often times such filings indicate that the broker is engaging potentially in private securities transactions, promissory notes, or loans away from the firm. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.
At this time it unclear the scope of Ross’ OBAs and/or private securities transactions. According to brokercheck records Ross has disclosed OBAs listed as including Ross Financial Planning, Inc., Belmont University, and First Shot Foundation. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate brokers, or insurance agents to clients of those side practices.
In addition, Ross has disclosed six tax liens totaling hundreds of thousands of dollars that were filed from 2012 through 2014. A broker’s inability to pay debts may also be an indicator that a broker may solicit funds and loans from his clients or otherwise engage in other misconduct to raise funds to satisfy personal obligations.
Ross entered the securities industry in 1998. From December 2000 until May 2010 Ross was registered with Signator Investors, Inc. Thereafter, from May 2010 until April 2016, Ross was registered with Woodbury Financial out of the firm’s Murfreesboro, Tennessee office location.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.
Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein LLP are experienced in representing investors in cases of selling away and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.