The Financial Industry Regulatory Authority (FINRA) sanctioned broker Kevin Nevin (Nevin) concerning allegations that Nevin participated in 11 private securities transactions totaling $690,000 over the course of two years without first disclosing his participation his member firm. Through this conduct, FINRA found that Nevin violated NASD Conduct Rules 3040 and 2110.
Nevin entered the securities industry in 1994 and is currently a representative of Capital Guardian, LLC. In March 2006, Nevin became associated with VSR Financial Services (VSR) until February 2011, when he was terminated. In addition, to the recent FINRA complaint, Nevin has also been subject to three customer complaints. Some of the customer complaints concern allegations of unsuitable sales practices and securities fraud concerning variable annuities. Another customer complaint concerns the recommendation of oil & gas and real estate related private placements.
FINRA alleged that during part of the time he was registered with VSR, Nevin operated out of an office with another VSR registered representative referred to by the initials “PL.” FINRA found that PL was involved with at least three private placement offerings involving real estate and/or appurtenant property rights entities in the state of Colorado: Breakwater Capital Group, LLC; Yokam Land Holdings, LLC; and South Platte Land & Water, LLC. FINRA found that PL assured Nevin that he had informed VSR of the involvement in the Colorado water rights and real estate activity and that the private placement offerings were conducted entirely under the operations of PL’s real-estate agency. According to FINRA, PL told Nevin that he could recommend investments in these offerings to his customers and earn commissions on any ensuing investments if he obtained a real-estate license.
Thereafter Nevin obtained a Florida real-estate license in 2007. FINRA found that from 2007 and 2008, 11 of Nevin’s customers at VSR invested a total of $690,000 in the three private placements. FINRA found that Nevin recommended all 11 of these transactions and received a total of approximately $37,000 in commissions. FINRA alleged that Nevin did not give VSR prior written notice of his customers’ intended investments in the three private placements and consequently VSR never approved Nevin’s participation in those transactions and did not record any of the transactions on its books and records. Through this conduct, FINRA found that Nevin violated NASD Conduct Rules 3040 and 2110.
The allegations against Nevin are consistent with a widespread supervisory issue in the financial industry referred to as a “selling away” violation. By selling away securities, a broker solicits investments that were not first approved by the broker’s firm. However, brokerage firms owe a duty to investors and the public to properly supervise its employees in order to ensure that their activities do not take advantage of the public trust placed in them by their position.
The attorneys at Gana 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.