“Selling away” occurs when a securities broker or broker-dealer buys, solicits, or sells securities that were not approved by the broker’s affiliated firm or recorded on the firm’s books and records. Selling away is prohibited under the rules of the Financial Industry Regulatory Authority (FINRA), particularly FINRA Rule 3040, as well as other securities laws.
On August 27, 2014, Maleche entered into a letter of Acceptance, Waiver and Consent (“AWC”) with FINRA, wherein he consented to a nine (9) month suspension from all securities related activity and agreed to pay a $5,000 fine to FINRA. According to the AWC, Benjamin Maleche entered the securities industry in July 2008 with a FlNRA member firm as a registered representative and investment adviser representative (“IAR”). In April 2010, Maleche became licensed as a general securities representative (“GSR”) with Chase Investment Services Corp. (BD No. 25574), which later merged with JP Morgan Securities, Inc.
On November 27,2012, the Firm filed a Form U5 Uniform Termination Notice for Securities Industry Registration (the “Form U5”) with FINRA disclosing that Maleche’s employment was terminated on November 9, 2012.
In January 2013, Maleche became associated as a GSR with LPL Financial, LLC. On October 3,2013, JP Morgan filed an amended Form U5 which disclosed that Maleche allegedly solicited an unapproved outside investment product while employed by the Firm and that the investigation was ongoing. On May 16,2014, JP Morgan filed a second amended Form U5 reporting that the Firm’s investigation into Maleche’s solicitation of outside investments was completed and the Firm had concluded that certain events occurred. On June 19, 2014, LPL Financial filed a Form U5 disclosing that Maleche’s employment had been terminated on May 29, 2014. The Form U5 cited the following as the reason for termination: “… closure of an internal review by previous firm related to their allegations he solicited unapproved outside investment product…” Maleche is not currently employed by a FINRA member firm, but remains subject to FINRA’s jurisdiction pursuant to Article V, Section 4 of FINRA’s By-Laws.
FINRA found that between March 23, 2012 and April 11,2012, Maleche, while a registered with JP Morgan, referred four Firm customers to “TT,” an investment company that offered investments in a fund composed of pre-IPO shares. FINRA did not disclose the full name of the investment. According to FINRA, Maleche endorsed “TT” as an investment entity and recommended that four customers invest in TT. In furtherance of Maleche’s recommendation and to facilitate the investments, Maleche emailed Customer on March 27, 2012 expressly endorsing TT. Maleche also provided at least one customer with the subscription agreement and power of attorney forms needed to purchase shares in the Fund.
Finra determined that Maleche violated Finra Rule 3040 and 2010. FINRA Conduct Rule 3040 prohibits an associated person from “participat[ing] in any manncr in a private securities transaction” unless, prior to participating in the transaction, the associated person provides ?’written notice to the member with which he is associated describing in detail the proposed transaction and the person’s proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction.” A “private securities transaction” is defined in Rule 3040(e)(l) as “any securities transaction outside the regular course or scope of an associated person’s employment with a member…”
FINRA Rule 2010 provides that “[a] member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.”
If you invested with JP Morgan and Benjamin Doyle Maleche, please contact Gana LLP at 212-776-4251 or its managing partner at email@example.com.