Broker Christopher Orlando (Orlando) was suspended and fined by The Financial Industry Regulatory Authority (FINRA) over allegations that Orlando participated in the sale of approximately $7,000,000 in private securities transactions of promissory notes linked to Diversified Lending Group (DLG) that were not made through his member firm PlanMember Securities Corporation (PlanMember).
FINRA alleged that between March 2007, and July 2008 Orlando marketed Secured Investment Notes in DLG (DLG Notes). According to Orlando’s public disclosures, the DLG notes were supposed to invest funds in distressed real estate and mortgage lending. Investors who filed complaints against Orlando and the brokerage firms that employed him have alleged that in reality the DLG Notes were Ponzi scheme type fraud.
Orlando marketed the DLG Notes to insurance agents and financial advisors who in tum sold the DLG Notes to investors. FINRA alleged that Orlando met with his marketing agents and provided them with information and materials about DLG Notes. In addition, Orlando referred at least eight insurance agents to DLG for training so that they would sell DLG Notes to investors. According to FINRA, Orlando was also directly involved in marketing the DLG Notes to potential investors by speaking at seminars about them.
FINRA found that Orlando distributed the notes through a marketing organization that sold at least $60 million of DLG Notes. FINRA alleged that while Orlando was at PlanMember investors purchased at least $7 million of DLG Notes that were marketed by Orlando. FINRA found that Orlando received approximately $206,625 in commissions from his DLG Notes sales. Based upon FINRA’s investigation the regulator suspended Orlando for two years and fined the broker $10,000.
Orlando was registered as an Investment Company Products/Variable Contracts Representative since May 1997. From October 2002, until November 2006, Orlando was registered with PartnerVest Securities, Inc. Thereafter, from December 12, 2006, Orlando became registered PlanMember. PlanMember filed a Uniform Termination Notice for Securities Industry Registration (Form U5) on July 31, 2008, stating that Orlando voluntarily terminated from the firm. From December 2008 through August 2013, Orlando was a registered representative of 5 different firms including Ascher/Decision Services, Inc., Longview Financial Group, Inc., Grant Williams L.P., Innovation Partners LLC, and Securities America, Inc (Securities America). On August 19, 2013, Securities America filed a Form U5 stating that Orlando was terminated on or about August 16, 2013. Orlando’s BrokerCheck discloses that Orlando is involved in several other businesses including Chris Orlando, a wholesaler of insurance related products, Elite Football League of India, and Sports Reward Park.
The allegations against Orlando are consistent with allegations concerning outside business activities and a “selling away” violation. Selling away occurs when a securities broker solicits securities that were not first approved by the advisor’s firm. Selling away violates a number of securities laws including FINRA Rule 3040.
Brokerage firm’s confronted by selling away claims typically respond to complaints by claiming ignorance to the broker’s wrongful actions. However, under FINRA Rule 3010, firms have an obligation to supervise their employees. The attorneys at Gana LLP are experienced in investigating claims concerning failure to supervise outside business activities. Our attorneys can help you detect and uncover suspicious activity in your accounts. Our consultations are free of charge and the firm is only compensated if you recover.