Securities Lawyers Blog
Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Dominic DeBruin (DeBruin), formerly associated with LPL Financial, LLC (LPL Financial). According to brokercheck, FINRA found that DeBruin refused to provide information and documents and to appear for on-the-record testimony as requested by FINRA concerning a member firm’s Form U5 reporting that he was under internal review for depositing client’s funds related to potential private securities transactions undisclosed to the firm into a bank account DeBruin controlled.
At this time it is unclear the total scope and extent of these outside business activities and private transactions. However, according to DeBruin’s disclosures he is affiliated with the following entities: 1) Capricorn Partners, LLC – DeBruin’s securities d/b/a; 2) Out of Order LLC – an entertainment boking agency; 3) Goodlife Financial Group – an investment d/b/a; 4) Top 5 Entertainment. 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”. Often times brokers who engage in this practice use outside businesses in order to market their securities.
DeBruin entered the securities industry in 1996. From October 2005 until October 2012 DeBruin was associated with Waddell & Reed, Inc. Finally, from October 2012 until October 2016 DeBruin was associated with LPL Financial out of the firm’s Mesa, Arizona 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.
The investment fraud attorneys at Gana Weinstein LLP have represented hundreds of investors in securities related disputes including 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.