Selling Away

FINRA Bars Advisor William Wyman Over Private Securities Transactions

September 24, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor William Wyman (Wyman), in January 2017, was barred by FINRA over his failure to respond to FINRA inquiries. FINRA’s inquiries came after a customer complained about a private securities transaction. Wyman’s employment with his brokerage firm, Ameriprise Financial Services, Inc. ended in November 2016 on the heels of the allegations. At this time it is unknown the extent of Wyman’s private securities transactions. His disclosures list ownership of Wyman and Shier Financial Services and do not disclose involvement in other outside businesses.

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.

Advisor Paul Smith Barred By FINRA Over Haverford Group Securities Sales

September 17, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Paul Smith (Smith), in June 2017, was barred by FINRA for failing to provide documents and information concerning private securities transactions.

Prior to the FINRA bar Smith was terminated by his firm Bolton Global Capital (Bolton Global) over claims by the firm that the firm was notified by the SEC that smith engaged in private securities transactions. In addition to the termination Smith has been subject to ten customer complaints.

According to the customer complaints, Smith’s clients were solicited to invest in the Haverford Group which turned out to be a fraudulent investment offering. It appears that Smith recommended the Haverford investments since at least 2011 through 2017. At this time the extent and scope of the fraud is unknown.

Advisor Walter Starghill Terminated by Lincoln Investment Over Private Securities Transactions

July 13, 2017 | by Staff Attorney

According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Walter Starghill (Starghill), in March 2017, was discharged by brokerage firm Lincoln Investment over allegations of Starghill’s “participation in a private securities transaction in violation of Firm policy.” In the industry all securities transactions, private investments, loans, or other financial transactions with the investing public must be disclosed and approved by the firm before the broker can engage in them.

At this time it is unclear what outside business activity Starghill was engaged in. According to Starghill’s disclosures he was involved with TSG Transportation LLC – a transportation service. 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. In addition, Starghill obtained a Series 6 license as opposed to a broader Series 7 license. A Series 6 license is a very limited license that only allows brokers to sell variable annuities and open end mutual funds. Sometimes brokers with Series 6 licenses engage in private securities transactions due to their limited license.

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”.

FINRA Bars Advisor Michael DeBoer Over Private Securities Transactions

July 10, 2017 | by Staff Attorney

According 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”.

FINRA Bars Norman Farra Jr. Over Private Securities Transactions

June 14, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the allegations made by The Financial Industry Regulatory Authority (FINRA) resulting in a bar of broker Norman Ferra Jr. (Ferra) who was previously registered with International Assets Advisory, LLC working out of the Tampa, Florida office. Ferra has 20 years of experience in the securities industry and three disclosures on his record.

In March 2017, Ferra was barred after he consented to the sanction and to the entry of findings that he failed to respond to letters requesting that he produce documents and information in connection with an investigation regarding undisclosed outside business activities and private securities transactions. No other disclosure concerning the extent and nature of the activity is disclosed.

However, Ferra has disclosed several outside business activities including his d/b/a Rockport Global Advisors. Ferra has also disclosed entities including EG Advisory LLC It is unclear at this time what entities Ferra’s outside business activities that were the subject of the FINRA bar involve.

Ameriprise Financial Terminates Stephen Mosley Over Private Securities Transactions

June 14, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating Ameriprise Financial Services, Inc.’s (Ameriprise) termination of former broker Stephen Mosley (Mosley) working out of the Lake Havasu City, Arizona office. Ameriprise terminated Mosley in November 2016. According to the broker’s Financial Industry Regulatory Authority (FINRA) BrokerCheck filing the firm stated that Mosley “was terminated for compliance policy violations related to complying with disciplinary action and heightened supervision, soliciting a prohibited security and suitability of a transaction.” Mosley also has two customer complaints listed on his record. No other disclosure concerning the extent and nature of the activity is disclosed.

However, Mosley has disclosed several outside business activities including his d/b/a Wisdom & Wealth Corp. Mosley has also disclosed entities including LP Prop, LLC – a real estate holding company. It is unclear at this time if Mosley’s activities involve any of these disclosed entities.

The providing of loans, selling of promissory notes, or recommending investments outside of the firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate agents, or insurance agents to clients of those side practices.

FINRA Bars Norman Farra Jr. Over Private Securities Transactions

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the allegations made by The Financial Industry Regulatory Authority (FINRA) resulting in a bar of broker Norman Ferra Jr. (Ferra) who was previously registered with International Assets Advisory, LLC working out of the Tampa, Florida office. Ferra has 20 years of experience in the securities industry and three disclosures on his record.

In March 2017, Ferra was barred after he consented to the sanction and to the entry of findings that he failed to respond to letters requesting that he produce documents and information in connection with an investigation regarding undisclosed outside business activities and private securities transactions. No other disclosure concerning the extent and nature of the activity is disclosed.

However, Ferra has disclosed several outside business activities including his d/b/a Rockport Global Advisors. Ferra has also disclosed entities including EG Advisory LLC It is unclear at this time what entities Ferra’s outside business activities that were the subject of the FINRA bar involve.

LPL Financial Terminates Christopher Russell Over Private Securities Transactions

May 31, 2017 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating the LPL Financial LLC’s (LPL) termination of former broker Christopher Russell (Russell) working out of the Huntsville, Alabama office. LPL terminated Russell in November 2016. According to the firm’s Financial Industry Regulatory Authority (FINRA) BrokerCheck filing the firm stated that Russell was in “Violation of Firm policy regarding private securities transactions.” No other disclosure concerning the extent and nature of the activity is disclosed. However, Russell has disclosed several outside business activities including his d/b/a Cadence Investment Services. Russell has also disclosed Cadence Bank described as a private bank. Russell has also disclosed involvement with the Huntsville Chamber of Commerce and the Community Foundation of Huntsville.

The providing of loans, selling of promissory notes, or recommending investments outside of the firm constitutes impermissible private securities transactions – a practice known in the industry as “selling away”. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, real estate agents, or insurance agents to clients of those side practices.

Russell entered the securities industry in 2005. From May 2008 until March 2013, Russell was associated with Wells Fargo Advisors, LLC. Then, from May 2014 until November 2016 Russell was associated with LPL out of the firm’s Huntsville, Alabama office location.

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

May 27, 2017 | by Staff Attorney

Our 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.

FINRA Accuses Advisor Dawn Bennett of Wrongfully Selling Promissory Notes

February 5, 2017 | by Staff Attorney

Our law offices are continuing its investigation and the recent developments in the Dawn Bennett (Bennett) case. Recently the Financial Industry Regulatory Authority (FINRA) filed a complaint alleging that Bennett sold $6 million in promissory notes concerning her retail clothing business – DJBennett.com owned by DJB Holdings, LLC. As a background, we previously reported that The Securities and Exchange Commission (SEC) filed fraud charges against Bennett, a Maryland-based financial services firm and founder/CEO of Bennett Group Financial Services accusing her of grossly inflating the amount of managed assets and exaggerating the investment returns actually obtained for customers.

Thereafter, on July 11, 2016, the SEC barred Bennett from the securities industry for violating federal securities rules by for making material misrepresentations and omissions regarding her assets under management. See ln the Matter of Bennett Group Financial Services, LLC & Dawn J. Bennet, File No. 3-16801. Bennett also was ordered to cease and desist from any further violations of the federal securities rules, pay disgorgement of $556,102, and pay a civil penalty of $600,000.

FINRA continued investigating Bennett’s activities and alleged in its recent complaint that Bennett, while associated with Western International Securities, Inc., had a retail clothing business called DJBennett.com owned by DJB Holdings, LLC. FINRA found that during 2015 Bennett sold approximately $6 million in DJB convertible notes and promissory notes guaranteed by DJBennett.com, to approximately 30 investors. FINRA also uncovered evidence that Bennett may have misappropriated investors’ money, committed fraud, and engaged in undisclosed outside business activities and private securities transactions.