Selling Away

Masood Azad Barred by FINRA Over Securities Sales Practices

December 18, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Masood Azad (Azad), in May 2017, was terminated by his employer First Allied Securities, Inc. (Frist Allied) after the firm alleged that Azad violated firm policy relating to borrowing money from clients, engaging in an unapproved private securities transaction and outside business activity. Thereafter, FINRA opened an investigation and ultimately barred Azad from the industry. FINRA found that Azad failed to provide FINRA requested documents and information in connection with its investigation into allegations of misconduct by Azad. FINRA stated that the allegations included that Azad participated in an unapproved private securities transaction by soliciting investments and/or directly investing in an electronic data security company and engaged in outside business activities involving the company without obtaining authorization from the firm.

At this time it is unclear the extent and scope of Azad’s securities violations and outside business activites. Azad’s CRD lists that he is also an attorney and operates the Law Offices of M.H. Azad. Azad also lists an insurance business called Consolidated Working Group and operates a d/b/a for his securities business called Robertson Wealth Management. Finally, Azad lists American Retirement Solutions as another securities related d/b/a outside business activity. While at this time it is unknown the exact products and services sold away any selling of notes or 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.

Advisor Jerry Guttman Barred For Investing $7,000,000 of Client Funds in Private Companies

December 17, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Jerry Guttman (Guttman), operating under the d/b/a Guttman Financial Group, in November 2017, was barred from the financial industry by FINRA concerning allegations that he sold more than $7,000,000 worth of membership interests in at least six different limited liability companies to 38 customers without proper disclosure. FINRA found that Guttman participated in the sales of these membership interests by soliciting the membership interests to investors; communicating with investors about their investments; drafting, distributing, and collecting the investment agreements; collecting and depositing investors’ checks into the companies’ bank accounts; and managing the companies as one of only two managing members.

Guttman’s employer, United Planners Financial Services of America (United Planners) discharged Guttman in September 2017 alleging that Guttman offered unapproved investments.

At this time it is unclear the extent and scope of Guttman’s securities violations and outside business activites. However, Guttman’s CRD lists a number of outside business activities and companies that may be vechiles for his fundraising activities. Guttman is involved with Walled Lake Properties – a condo rental property, Serenity Management, LLC – a cemetery business, Leasing USA – commercial property rental company, Sofa Society for Financial Awareness as a consultant, Nationwide Planning & Benefits (NPB Solutions) – the marketing and sale of insurance products, Leasing USA II – a commercial property rental company, Champion Entertainment Group, LLC – a company that records TV songs, 92^nd Street Holdings – a commercial property rental company, and Total Living Plan, LLC – estate planning company.

Clement Chichester and Brittney Sias Barred Over Claims of Receiving Customer Funds

November 30, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisors Clement Chichester (Chichester) and Brittney Sias (Sias), in October 2017, were terminated by their firm, Western International Securities, Inc. (Western International) based on allegations that they accepted a FINRA sanction. Chichester and Sias were barred from the industry by FINRA after FINRA requested documents and information and they failed to provide FINRA with the requested documents and information after initially providing partial responses to a previous request in connection with FINRA’s investigation of their alleged receipt of funds from a customer of the firm.

At this time it is unclear the extent and scope of Chichester’s and Sias’ private securities activities. Chichester CRD lists that he is engaged in insurance as an outside business activity. 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.

Dennis McMurray Barred Over Claims of Private Securities Transactions

November 9, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Dennis McMurray (McMurray), in August 2017, was terminated by his firm, Girard Securities, Inc. (Girard Securities) based on allegations that McMurray violated the firm’s policy on selling away and private securities transactions. The firm also alleged that McMurray used a non-approved email address. In addition, McMurray was barred from the industry by FINRA after FINRA requested documents and information related to an investigation into the circumstances surrounding his termination from Girard and McMurray refused to provide documents.

At this time it is unclear the extent and scope of McMurray’s private securities activities. McMurray’s CRD lists that he is engaged in several outside business activities including 2 Truths – a mobile application development company, and is a part owner of Veritas IQ – a marketing, networking and personal development company. At this time it is unclear whether or not McMurray’s private securities activities involve these entities or one that is not listed.

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”.

Advisor Anthony Vultaggio Barred By FINRA in Connection With Undisclosed Sales of Securities

November 8, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Anthony Vultaggio, Jr. (Vultaggio), in September 2017, was accused by FINRA of failing to cooperate in an investigation into the circumstances surrounding Vultaggio alleged sale of undisclosed securities through an undisclosed outside business. Vultaggio is formerly associated with American Capital Partners, LLC (American Capital). According to the FINRA action, Vultaggio was barred by the regulator after the broker failed to respond to requests for documents and information during the investigation.

At this time the extent of Vultaggio’s outside business activities and securities sales are unknown. The only public disclosure on Vultaggio’s BrokerCheck contains is Vultaggio’s investments in commercial and residential real estate.

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”.

Christopher Parr Under Investigation in Connection With Borrowing Client Funds

November 8, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Christopher Parr (Parr), in October 2017, was under investigation by FINRA based on a preliminary determination that Parr’s conduct allegedly violated FINRA Rules 3240, 3280, and 2010. In addition, the state of Kansas has a pending regulatory mater concerning allegations that Parr borrowed money from a client on three occasions and did not disclose the loans to his firm. These allegations concern conduct that occurred while Parr was registered with KCD Financial, Inc. (KCD Financial).

At this time it is unclear the extent and scope of Parr’s activities. Parr’s CRD lists that he does business under the name First Capital Group, Inc.

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”.

Christopher Wendel Terminated Over Claims of Private Securities Transactions

November 5, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Christopher Wendel (Wendel), in September 2017, was terminated by his firm, SA Stone Wealth Management Inc. (SA Stone Wealth) based on allegations that Wendel violated the firm’s policy on selling away. In addition, Wendel has five customer complaints on his record. The latest customer complaint occurred in May 2013 and alleged that the customer was sold in unsuitable REITs. The claim alleged $171,000 in damages and was settled.

At this time it is unclear the extent and scope of Wendel’s private securities activities. Wendel’s CRD lists that he is engaged in an outside business activity called Smoke on the Water LLC.

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”.

Advisor Scott Newsholme Accused of Stealing More than $1 Million From Clients

October 16, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Scott Newsholme (Newsholme), in September 2017, was accused by the Securities and Exchange Commission (SEC) of stealing more than $1 million from his clients. Newsholme’s problems began back in July 2014 when he was terminated by his then employer SII Investments, Inc. (SII). SII stated that Newsholme was terminated due to allegations that Newsholme stole her IRA assets and engaged in private securities transactions.

In addition to being an investment advisor, Newsholme is a tax preparer, accountant, and the proprietor of MVP Financial LLC in Howell, New Jersey. Between 2002 and 2010 Newsholme was president of two predecessor tax, accounting, and financial planning firms in Matawan, New Jersey – Newley Financial Group, Inc. and Newsholme Financial Center LLC.

In September 2014, FINRA brought an action against Newsholme and ultimately barred him from the industry when Newsholme failed to respond to information requests concerning the issues raised in his SII termination. In June 2015, the State of New Jersey revoked Newsholme’s securities license and imposed an $85,000 fine stating that Newsholme egage in unethical business practices.

Advisor William Glaser Under FBI Investigation in Connection With Paul Creager Real Estate Securities

October 15, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor William Glaser (Glaser), in September 2017, was accused by FINRA of failing to cooperate in an investigation into the circumstances surrounding Glaser’s termination by National Panning Corporation (National Planning). National Planning terminated Glaser in June 2017 after alleging it had received an arbitration claim alleging that Glaser had solicited a private investment away from the firm. Glaser operated his securities business through a dba called Legacy Wealth Advisors, Inc.

The private investments Glaser was participating appear to be connected to the arrest of Paul Creager (Creager) in August 2017. Creager has been indicted on two felony counts of wire fraud. According to the indictment Creager financed his development company through promissory notes and by selling interests in his companies to investors. The indictment claims that Creager misled investors by failing to disclose that Financial & Marketing Solutions LLC had lent him more than $3.2 million and had a priority secured position in his real estate developments. It appears that some of the investors were brought to Creager through Glaser.

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”.

Advisor Bruce Barber Barred By FINRA After Engaging in Private Securities Transactions

October 15, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Bruce Barber (Barber), in September 2017, was accused by FINRA of engaging in an undisclosed outside business activity by serving as an advisor to the Board of Directors for ABC, LLC (ABC) and being compensated by the company with warrants. According to FINRA, Barber solicited 15 clients to invest in ABC’s private securities offering. At this time it unknown the full extent and scope of Barber’s outside business activities.

In February 2017, Barber’s then employer Securities America, Inc. (Securities America) terminated him stating Barber solicited customers to purchase an unapproved securities product and participated in an unapproved outside business activity.

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”.