The Financial Industry Regulatory Authority (FINRA) recently barred broker Jason Muskey for failing to respond to the regulator’s requests for information. FINRA’s investigation appears to have been prompted by Muskey’s termination from Ameritas Investment Corp. (Ameritas) after the firm alleged that he failed to respond to the firm’s request for information concerning an internal investigation concerning theft and forgery. Muskey was registered with Ameritas from June 2006, through June 2014. Muskey operated his business through Ameritas, upon information and belief, through a DBA called Muskey Financial Services.
Since the termination eight customers have filed customer complaints against Ameritas accusing the firm of failing to supervise Muskey’s activities and alleging that Muskey engaged in a Ponzi scheme that led to the theft of their funds.
As recently reported in the times-tribune Muskey was sued recently by his own mother, his wife’s uncle, an aunt, and two others alleging that he stole almost $400,000 in the scheme. Muskey allegedly used the money for his personal benefit and covered up the thefts for years by sending out fake quarterly financial statements that listed a set of phony investments. Many of Muskey’s victims are hard-working blue collar workers who had placed their money with Muskey for retirement.
After being caught, Muskey shut down his Birney Avenue office in June 2014 and told clients the United States Secret Service was investigating him. Many investors did not realize their money was stolen until they received that letter. According to the article, Muskey voluntarily told the Secret Service what he did and has cooperated with the government.
The allegations against Muskey are consistent with a “selling away” securities violation. Selling away occurs when a financial advisor solicits investments in companies or promissory notes that were not approved by the broker’s affiliated firm. Under the FINRA rules, a brokerage firm owes a duty to properly monitor and supervise its employees. In order to properly supervise their brokers each firm is required to establish and maintain a system to supervise the activities of each registered representative to achieve compliance with the securities laws. Selling away often occurs in environments where the brokerage firms either fails to put in place a reasonable supervisory system or fails to actually implement that system and meet supervisory requirements.
In selling away cases, investors are unaware that the advisor’s investments are either not registered or not real. Typically investors will not learn that the broker’s activities were wrongful until after the investment scheme is publicized or the broker simply shuts down shop and stops returning client calls.
Investors who have suffered losses through Muskey’s scheme may be able recover their losses through arbitration. The attorneys at Gana LLP are experienced in representing investors in cases of selling away, Ponzi schemes, and brokerage firms failure to supervise their representatives. Our consultations are free of charge and the firm is only compensated if you recover.