According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor George McCaffrey (McCaffrey), formerly associated with NTB Financial Corporation (NTB Financial), in September 2018, was sanctioned and suspended from the securities industry by FINRA over accusations of potentially selling unapproved products.
In September 2018 FINRA alleged that McCaffrey consented to the sanctions and findings that he participated in 22 undisclosed private securities transactions in which nine investors purchased $1,775,000 in debt and equity securities. FINRA found that McCaffrey introduced the nine individuals to representatives of a greenhouse building and leasing company so they could invest in the company. Other activities McCaffrey is alleged to have performed include reviewing and editing documents relating to the investments, forwarding investment-related documents to the customers, and communicating with the customers about their investments.
The investors were found to have purchased $1,775,000 in promissory notes of the greenhouse building and leasing company and preferred stock in one of the company’s affiliates. FINRA also found that the company paid $124,250 in commissions to an entity controlled by McCaffrey’s wife.
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.
McCaffrey entered the securities industry in 1978. From July 1989 through October 2017 McCaffrey was was associated with NTB Financial out of the firm’s Englewood, Colorado office location.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. Investors may be able recover their losses through securities arbitration. The attorneys at Gana Weinstein 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.