FINRA Bars Broker Clifford Morgan In Connection With the Sale of Over Promissory Note Sales

shutterstock_186772637The securities lawyers of Gana LLP are investigating Clifford Morgan (Morgan) bar from the securities industry. The Financial Industry Regulatory Authority (FINRA) recently brought an enforcement action (FINRA No. 2011025610501) against Morgan alleging that between November 2011 and December 2014, while he was associated with brokerage firm Uhlmann Price, Securities, LLC (Uhlmann Price) Morgan participated in private securities transactions – also referred to as “selling away” in the industry – without providing notice to his firm. FINRA also found that in engaging in the private securities transactions Morgan made material misrepresentations to customers and also participated in numerous outside business activities without providing the required notice to the firm.

Clifford Morgan entered the securities industry in January 2004. Between January 2007 and December 2014, Morgan was associated with Uhlmann Price. On December 5, 2014, Uhlmann Price filed a Form U5 reporting that Morgan had been “permitted to resign” with the explanation that the ”registered representative participated in private securities transactions in conflict with firm policies.”

It is unclear from the regulatory filings what companies were invested in but from publicly available information, Morgan’s brokercheck disclosures reveal several outside business activities including US College Planning, W&C Business Management, Strategis Wealth Consulting, and Strategis Wealth Advisory Group.

FINRA alleged that between September 2013 and August 2014, Morgan referred approximately 20 people to an investment in promissory notes in a company that was a private trading and financial services company. In connection with the referrals FINRA alleged that Morgan participated in meetings and telephone calls regarding the promissory notes offered, provided marketing materials to the investors, and answered questions regarding the offering. In total, FINRA found that Morgan referrals purchased approximately $1.8 million of the companies notes. In addition, FINRA found that Morgan personally invested more than $200,000 of the notes.

FINRA also found that Morgan participated in two additional private securities transactions. One in March 2012, resulted in a customer investing $25,000 in return for an equity stake in a company and another in May 2013, where Morgan referred a customer to invest in another company.

FINRA also alleged that in connection with Morgan’s referrals he made material misrepresentations and omissions by providing customers with a document created by the company that contained multiple misrepresentations including: (1) false statements that the company had completed four deals; (2) overstating revenues; and (3) false projections of high return with low risk.

Finally, FINRA also found that between 2011 and December 2014, while he associated with Uhlmann Price, Morgan was involved numerous outside business activities without providing prior written notice to the firm including: (1) Morgan was appointed as an advisor to a company where he would receive compensation; (2) Morgan was involved in the formation of another company and opened a bank account for an LLC that both Morgan and another individual could access; (3) Morgan conducted business for yet a sixth company from which his company received $60,000; (4) Morgan, with two business partners, formed a seventh company that listed Morgan’s address as its place of business; (5) Morgan and a business associate formed an eighth company that listed Morgan was the registered agent; (6) Morgan and a business associate formed a ninth company to make oil and gas investments; (7) Morgan and another individual formed a tenth Company as a non-profit entity where Morgan served as Treasurer and the entity listed Morgan’s address as its place of business; and (8) Morgan was a founding member of a company and signed loan agreements on behalf of the entity.

In cases of selling away the investor is unaware that the advisor’s investments are improper. In many of these cases the investor will not learn that the broker’s activities were wrongful until after the investment scheme is publicized, the broker is fired or charged by law enforcement, or stops returning client calls altogether.

Investors who have suffered losses may be able recover their losses through securities arbitration. 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.