FINRA Bars Advisor Thomas Vilord Over Sales of Unregistered Corporate Notes

shutterstock_85873471-300x200Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Thomas Vilord (Vilord), formerly associated with brokerage firms Summit Brokerage Services, Inc. (Summit Brokerage) and SagePoint Financial, Inc. (SagePoint).  According to brokercheck, FINRA found that Vilord consented to the sanction that he participated in undisclosed private securities transactions involving more than $347,500 in unregistered corporate debenture notes sold to customers of his member firm.  FINRA found that Vilord assisted these customers in making the investments by preparing transaction paperwork and providing the customers with information about the company issuing the notes.  FINRA also stated that Vilord lacked a reasonable basis to recommend the notes because he failed to conduct adequate due diligence on the offering because Vilord’s knowledge of the company was limited to his conversations with the company’s owner, information contained on the company’s website, and Google searches.

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”.  Often times brokers who engage in this practice use outside businesses in order to market their securities.

Vilord entered the securities industry in 2000.  From November 2007 until June 2013 Vilord was associated with SagePoint.  Finally, from June 2013 until November 2016 Vilord was associated with Summit Brokerage out of the firm’s Turnersville, New Jersey 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.

The investment fraud attorneys at Gana LLP have represented hundreds of investors in securities related disputes including 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.