FINRA Sanctions Sylvester King Jr. Over Improper Loans and Private Securities Transactions

shutterstock_180342155The Financial Industry Regulatory Authority (FINRA) sanctioned (Case No. 2013036262101) broker Sylvester King Jr. (King) concerning allegations that from July 2009, through November 2012, while King was registered Morgan Stanley Smith Barney LLC (Morgan Stanley) and later Wells Fargo Advisors, LLC (Wells Fargo), circumvented Wells Fargo’s policies and procedures by assisting another broker in concealing nearly $400,000 in loans to three firm customers, loaned $25,000 to a customer without permission, participated in an undisclosed private securities transaction, otherwise referred to in the industry as “selling away”, where eight customers invested more than $3 million, and provided false information to Morgan Stanley on two separate questionnaires.

King entered the securities industry in 1999. From 2006, until June 2009, King was registered with Citigroup Global Markets Inc. (Citigroup). From June 2009, until October 2010, King was associated with Morgan Stanley. Thereafter, from October 2011, until May 2015, King was associated with brokerage firm Wells Fargo. On April 27, 2015, Wells Fargo filed a notice of Termination Form U-5 on the same day that FINRA entered into its agreement with King in which King accepted a fine and sanctions stating that King was discharged from the firm because of the settlement with FINRA which included an 18 month suspension. Thereafter, FINRA filed a second regulatory action stating that King failed to pay the $35,000 required as part of the settlement as of July 28, 2015.

FINRA alleged that in 2009, King and his partner referred to by the initials “AP”, formed PKG, a d/b/a branch office located in Florida registered through Morgan Stanley and then Wells Fargo. PKG allegedly provided financial “concierge” services to professional athletes who played in the NFL and the NBA. FINRA alleged that King committed the violations contained in the complaint for the supposed benefit, of several of these athletes.

FINRA found that from November 2011, through January 2012, while King was registered with Wells Fargo, King assisted his partner in loaning approximately $399,500 to three professional athletes in the NFL and NBA. In order to conceal the loans from Wells Fargo, FINRA alleged that AP wired the loan funds first to an entity referred to as “BPKG”, an entity owned by King’s and AP’s family members. FINRA alleged that King controlled the finances of BPKG and could effect transfers of funds from the account. FINRA alleged that King, at AP’s direction, wired the loan funds from BPKG to the customers. FINRA found that King understood that AP transferred the loan funds through BPKG in order to avoid Wells Fargo’s reporting requirements.

In addition, FINRA alleged that from approximately July 2009, through February 2012, King participated in a private securities transaction in a company referred to as “GVC”, a startup internet branding company managed by an individual with the initials “GH”, a friend of King’s partner AP. FINRA alleged that King and AP referred several of their clients to GH for the purpose of investing in GVC. According to FINRA eight of King’s and AP’s clients purchased approximately $3.08 million of preferred GVC stock. FINRA found that King facilitated these transactions by sending PowerPoint presentations and other information concerning GVC to potential investors and forwarding and retrieving required documentation to and from investors. These investments were not approved by King’s brokerage firms.

Investors who have suffered losses may be able recover their losses through securities arbitration. The attorneys at Gana LLP are experienced in representing investors who have lost money in selling away investments. Our consultations are free of charge and the firm is only compensated if you recover.