The investment fraud lawyers of Gana LLP are investigating the regulatory investigation filed by The Financial Industry Regulatory Authority (FINRA) against broker Zahir Walji (Walji). According to BrokerCheck records Walji is subject to five customer complaints one FINRA matter and one employment separation for cause. The FINRA regulatory matter concerns an investigation surrounding alleged sales of private securities transactions. (FINRA No. 2012034370501).
According to FINRA, from April 2011 through October 2012, while Walji was associated with UBS Financial Services, Inc (UBS), Walji participated in two outside business activities (OBAs) and participated in six private securities transactions without providing prior written notice of the OBAs or the private securities transactions to his firm. In addition, FINRA alleged that although Walji provided notice to UBS of two additional OBAs, he did not comply with the restrictions that UBS placed on him. As a result FINRA determined that Walji violated FINRA Rules. The providing of loans or selling of notes and other investments outside of a brokerage firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”.
At this time it unclear the nature and scope of Walji’s OBAs and private securities transactions. According to BrokerCheck records Walji disclosed that he is involved in outside business acitvities including KML, Inc. – a real estate related company, Round Rock – a real estate company, and Triad Equities, LLC – a real estate company. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.
Walji entered the securities industry in 2006. From 2006 until October 2012 Walji was registered with UBS. From October 2012 until May 2014, Walji was registered with Oppenheimer & Co. Inc. out of the firm’s Austin, Texas office location.
In the industry the term selling away refers to when a financial advisor solicits investments in companies, promissory notes, or other securities that are not pre-approved by the broker’s affiliated firm. However, even though when these incidents occur the brokerage firm claims ignorance of their advisor’s activities the firm is obligated under the FINRA rules to properly monitor and supervise its employees in order to detect and prevent brokers from offering investments in this fashion. In order to properly supervise their brokers each firm is required to have procedures in order to monitor the activities of each advisor’s activities and interaction with the public. Selling away misconduct often occurs where brokerage firms either fail to put in place a reasonable supervisory system or fail to actually implement that system. Supervisory failures allow brokers to engage in unsupervised misconduct that can include all manner improper conduct including selling away.
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.