FINRA Bars Advisor Juan Alejos (a/k/a John Alejos) Over the Sale of Private Investments

shutterstock_183549914-300x200Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Juan Alejos – a/k/a John Alejos (Alejos), formerly associated with brokerage firms Charles Morgan Securities, Inc. (Charles Morgan) and Spartan Capital Securities, LLC (Spartan Capital).  According to brokercheck, Alejos failed to respond to FINRA request for information resulting in an automatic bar from the financial industry.  The subject matter of FINRA’s investigation likely concerned his termination by Spartan Capital in December 2015 concerning allegations that Alejos engaged in outside business activities and possible private securities transactions without first providing the firm written notice of his activities.  At this time it is unclear what outside businesses or the extent of the private securities transactions.

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 own securities and raise capital for various ventures or get themselves through times of personal economic hardship.  In Alejos case the broker had a judgment imposed upon him of over $75,000 in 2011.

Alejos entered the securities industry in 2000.  From February 2008 until November 2012 Alejos was associated with Charles Morgan.  Finally, from October 2012 until December 2015 Alejos was associated with Spartan Capital out of the firm’s New York, New York 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.