Selling Away

FINRA Bars Raymond James Broker Jeffrey Ingros Over Outside Business Activities

March 19, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating a regulatory action brought by the Financial Industry Regulatory Authority (FINRA) against Jeffrey Ingros (Ingros) (FINRA No. 2013039166001) working out of Beaver, Pennsylvania. According to the FINRA action, Ingros consented to a bar from the securities industry after he failed to provide information requested by FINRA during its investigation concerning undisclosed loans from a customer and outside business 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 addition to the FINRA bar, Ingros has a long history of customer complaints and two employment separations for allegations of misconduct.

At this time it unclear the nature and scope of Ingros’ outside business activities and private securities transactions. However, according to Ingros’ public records his outside business activities include Fort McIntosh Group, LLC, Ingros Family, LLC, and Fort McIntosh Annuity & Insurance. Often times, brokers sell promissory notes and other investments through side businesses as accountants, lawyers, or insurance to clients of those side practices.

Ingros was associated with brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) from May 2007 until November 203. Finally, from November 2013 until February 2016 Ingros was registered with Raymond James Financial Services, Inc. (Raymond James).

FINRA Sanctions Broker Kevin Murphy Over Selling Away Allegations

March 9, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2015043159501) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Kevin Murphy (Murphy). FINRA alleged that in or about November 2013, Murphy sold $1.2 million of shares and warrants in a private placement to four individuals and one limited partnership without his firm’s knowledge.

According to FINRA, in August and September, 2013, Murphy made a $1.2 million investment in a private placement for which TGP Securities, Inc. (TGP), Murphy’s brokerage firm, was providing brokerage services. In return for his investment, FINRA found that Murphy received two stock certificates totaling 600,000 Series F shares and two warrants exercisable for 300,000 common shares. On November 29, 2013, FINRA alleged that Murphy resold the Series F shares and the warrants to four individuals and one limited partnership for $1.2 million without the permission of TGP.

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.

FINRA Files Complaint Against Ricky Moore Over Church Bonds Selling Away Allegations

March 9, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2013038770901) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Ricky Moore (Moore). FINRA alleged that between March 2012 and April 2013, while he was registered with Commonwealth Financial Network (Commonwealth Financial) Moore failed to disclose to the firm his outside business activities, also referred to as “selling away”, involving the facilitation of a church bond offering for a church located in Brazoria, Texas. In addition, to the FINRA complaint Moore has been subject to three customer complaints.

FINRA alleged in the complaint that Moore failed to disclose to his member firm his outside business activities involving the facilitation of a church bond offering for a church. The complaint alleges that Moore acted as the president and director of the church and facilitated the church bond offering for the church. In addition, FINRA found that Moore made a false and misleading statement on his firm’s annual compliance questionnaire when asked whether he had participated in raising capital, equity, or debt for a public or private investment. Moore answered “No” and also falsely stated that he had no undisclosed outside business activities. Thereafter, Commonwealth Financial conducted an investigation and Moore was permitted to resign after the firm terminated Moore’s registration.

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.

FINRA Sanctions Broker James Nixon Over Promissory Note Sales

March 7, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 1013038289101) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker James Nixon (Nixon). FINRA alleged that Nixon failed to provide prior written notice to Bridge Capital Associates, Inc. (Bridge Capital), his then employing brokerage firm, before selling $600,000 of convertible promissory notes – practice referred to as “selling away” in the industry. FINRA found that Nixon provided detailed written notice to Bridge Capital only after he had already disseminated investor presentations to approximately 40 potential investors and completed sales to three accredited investor. In addition, FINRA alleged that Nixon provided investor presentations that contained exaggerated and misleading statements about the issuer of the promissory notes, by the initials BRT, and failed to include a meaningful risk disclosure.

Nixon entered the securities industry in 1987. Nixon was registered with Bridge Capital Associates since December 2007 until September 2013, when Bridge Capital discharged Nixon in connection with the conduct concerning FINRA’s allegations. Shortly after Bridge Capital terminated his registrations Nixon became registered with a different firm, Source Capital Group, Inc. out of the firm’s Westport, Connecticut office location.

FINRA found that the promissory notes were offered without a PPM and that instead the notes were offered through an investor PowerPoint presentation that Nixon prepared in conjunction with the issuer. FINRA found that the investor presentation was devoid of any cautionary language specific to the promissory notes and that the prospects for notes were presented in very optimistic terms and stated financial projections at aggressive multiples without sources or support for such representations. FINRA found these representations to violate its communications rules.

Merrill Lynch Terminates Broker Patrick Sands on Selling Away Allegations

February 29, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating the employment separation filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Patrick Sands (Sands). According to BrokerCheck records Sands has been the subject of at least one customer complaint and one employment termination for cause.

In November 2015, Sands’ then brokerage firm Merrill Lynch, Pierce, Fenner & Smith Incorporated (Merrill Lynch) terminated Sands for cause alleging that the broker engaged in conduct inconsistent with the firm’s selling away policies. Participated in private securities transactions without approval of the firm is a practice known as “selling away” in the industry. The allegations appear to involve investments in private placements or direct participation programs such as non-traded real estate investment trusts (Non-Traded REITs), oil and gas programs, or equipment leasing.

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.

John Randall “JR” Gladden Accused of Selling Church Fund Loans Away from Brokerage Firm

February 22, 2016 | by Staff Attorney

The investment attorneys of Gana Weinstein LLP are investigating a regulatory complaint filed (Disciplinary Proceedings No. 2014038996201) by The Financial Industry Regulatory Authority’s (FINRA) against broker J. Randall Gladden (Gladden). FINRA alleged in the complaint that Gladden was associated with Securities Equity Group and participated in creating Church Development Fund, LLC (Church Development Fund) and a successor fund, Church Fund LLC (Church Fund) for the purposes of making loans to churches for refinancing their existing real estate loans. According to FINRA, Gladden participated in the management of the Church Development Fund and Church Fund and served as a governing member of the funds’ respective managers, CDF Managing Partners, LLC (CDF Managing Partners) and CF Manager, LLC (CF Manager).

According to the complaint, from May 2011 through September 2013, Gladden solicited seven investors to invest more than $2.1 million in the funds. The fund represented that it would pay investors a 6% per annum “Priority Return” on their investment. CDF Managing Partners was also to receive a monthly “Operator Fee” based upon a percentage of the outstanding principal amount of the loan portfolio of the Fund and a “Loan Fee” based upon a percentage of the original principal amount of each loan.

The conduct allegedly engaged in by Gladden is also referred to as “selling away” in the industry. 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 Kevin Wanner Accused of Selling Fraudulent Securities

February 15, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating regulatory complaints and the termination by Questar Capital Corporation (Questar) of broker Kevin Wanner (Wanner). Questar discharged Wanner alleging that The North Dakota Securities Department (NDSD) issued a cease and desist alleging that Wanner sold time certificate of deposit securities purporting to represent an investment in an FDIC insured interest bearing account and further misrepresented to the investors that their funds would be deposited with the FDIC member financial institutions represented. Instead, the funds were deposited into accounts owned and controlled by Wanner for his own purpose. Thereafter, on December 31, 2015, the NDSD revoked Wanner’s securities license in the state. On January 11, 2016, FINRA permanently barred Wanner form the securities industry.

According to new sources, Wanner and Precision Financial Services were barred from engaging in the business of insurance and from withdrawing any moneys from any banking or financial accounts. The order alleges that two people were given fraudulent certificates of deposit which cannot be authenticated by the banks listed on the documents.

The conduct allegedly engaged in by Wanner is also referred to as “selling away” in the industry. 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.

FINRA Investigates Customer Complaints Against Broker Eric Kuchel

February 12, 2016 | by Staff Attorney

The securities fraud lawyers of Gana Weinstein LLP are investigating customer complaints filed with The Financial Industry Regulatory Authority’s (FINRA) and the agency’s complaint against broker Eric Kuchel (Kuchel). According to BrokerCheck records Kuchel has been the subject of at least five customer complaints, one employment termination for cause, and one financial matter. Many of the customer complaints against Kuchel allege unauthorized trading among other claims. In addition, one complaint filed in June 2015 alleges failure to conduct due diligence on five non-traded private placement transactions resulting in damages of $499,999.

In November 2015, Kuchel’s then brokerage firm LPL Financial LLC (LPL) terminated Kuchel for cause for failing to appear for an interview with FINRA. Thereafter, In January 2016, FINRA filed a complaint (Disciplinary Proceeding No. 2015047966701) alleging that on numerous occasions he failed to appear at for testimony in connection with an investigating into mutual fund transactions and whether he participated in a private securities transaction, a practice known as “selling away” in the industry.

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.

LPL Financial Broker Alfred Talens Accused of Selling Unregistered Securities

February 5, 2016 | by Staff Attorney

The investment fraud lawyers of Gana Weinstein LLP are investigating customer complaints and the termination by LPL Financial, LLC (LPL) of broker Alfred Talens (Talens). There is at least one customer complaint against Talens alleging that the broker made unsuitable investments in connection with the sale of a variable annuity. The customer also alleges that the broker sold an unregistered security and claimed damages of $500,000. The conduct allegedly engaged in by Talens is also referred to as “selling away” in the industry. It is unclear from public disclosures the nature of the outside business but Talens public disclosures disclose that the broker has outside business activities including Ascension Wealth Management, a DBA for insurance and tax preparation, and AWM Consulting.

In addition, there is one employment separation disclosed. LPL alleged that Talens violated firm policy regarding outside business activities and borrowed money from clients. Thereafter, FINRA sent Talens a request for documents and information which the broker refused to respond to. Accordingly, FINRA automatically barred Talens from the securities industry on July 7, 2015.

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.

Broker Garland Benton Terminated For Private Securities Transactions

January 14, 2016 | by Staff Attorney

The investment lawyers of Gana Weinstein LLP are investigating customer complaints against broker Garland Benton (Benton). There are at least 3 customer complaints against Benton, one of which appears to be filed in connection with the solicitation of private securities transactions. In addition, there is one employment separations disclosed. One customer complaint alleges that Benton caused $946,670 in damages by failing to conduct due diligence on an investment while the firm has responded that the Benton was not a representative of the customer. In April 2015, Reef Securities Inc. (Reef) terminated Benton stating that the broker was permitted to resign after allegations were made that Benton failed to follow firm policies and procedures regarding private securities transactions from 2008. The conduct allegedly engaged in by Benton is also referred to as “selling away” in the industry.

Benton entered the securities industry in 2002. Between October 2002 and April 2015, Benton was associated with Reef.

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.