FINRA Bars Advisor Michael DeBoer Over Private Securities Transactions

shutterstock_143685652-300x300According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Michael DeBoer (DeBoer), in May 2016, was barred by FINRA over allegations of DeBoer, in June 2010, while registered with brokerage firm Dalton Strategic Investment Services Inc. (Dalton Strategic), DeBoer recommended two customers invest $200,000 in securities offered by IST – software development company.  FINRA found that DeBoer received $32,000 in compensation from the software development company for the referrals.  The investors ultimately lost the entirety of their investments.  Further, FINRA found that DeBoer did not disclose his participation in the transactions to his brokerage firm before making his recommendation.

In addition, FINRA also alleged that from November 2010 through December 2012 DeBoer marketed to his customers and other potential investors to HSG, a commodities and futures trading entity. According to FINRA, DeBoer received more than $70,000 in payments from the futures trading entity in return for his referral of approximately 28 people who collectively invested more than $1.8 million. FINRA also found that most or all of the people DeBoer referred to the futures trading entity lost a substantial amount of the money they invested.

FINRA requires brokers to disclose their outside businesses because the risk to investors is that the broker will use such businesses to engage in unauthorized securities activities.  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”.

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.

DeBoer entered the securities industry in 1991.  From November 2009 until April 2013, DeBoer was registered with Dalton Strategic.  From September 2013 until September 2014 DeBoer was associated with Signator Financial Services, Inc.  Finally form October 2014 until May 2015, DeBoer was associated with Fidelity Brokerage Services LLC out of the firm’s Clearwater, Florida office location.

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.