Securities Lawyers Blog
According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Thomas Sova (Sova), formerly associated with Hornor, Townsend & Kent, Inc. (Hornor Townsend) in Baton Rouge, Louisiana was terminated by his firm concerning allegations that Sova violated firm policies and procedures regarding disclosure of outside business activities relating to the outside sale of an unapproved and unregistered security. That termination came on the heels of an arbitration complaint filed a couple of months earlier in April 2018. The customer complaint alleged that Sova sold and unregistered security in May 2016 and seeks $100,000 in damages. The claim is currently pending.
At this time, the claims against Sova are unclear as to the exact nature and extent of the activity other than that it involves a mortgage investment fraud or real estate security. Sova has outside business disclosures including Sova Financial Group – his investment d/b/a. Sova also discloses that he is the owner of rental property.
The allegations against Sova conform to a practice known in the industry as “selling away” – a serious violation of the securities laws. 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. Sometimes those investments have some legitimacy but often times these types of investments can end up being Ponzi schemes or the advisor can be engaging in the conversion of funds. When advisors convert or misappropriate funds they often created businesses or other vehicles to serve as a cover for the theft of funds. However, federal securities laws and the FINRA rules require firms to 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.
Sova entered the securities industry in 1969. From October 2007 until June 2018 Sova had been associated with Hornor Townsend out of the firm’s Baton Rouge, Louisiana 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.