The Financial Industry Regulatory Authority (FINRA) recently sanctioned and barred broker Brian Exford (Exford) concerning allegations Exford refused to appear for on-the-record testimony requested by FINRA in connection with an investigation into possible private securities transactions (also referred to as “selling away”). According to FINRA BrokerCheck records Exford was disclosed outside business activities include Ives Hill Retirement. It is unclear whether FINRA’s investigation concerns this particular outside business activity. In addition, there is one customer complaint pending alleging unsuitable investments in a secondary market pension.
ln November 2002, Exford first became registered with FINRA as an Investment Company Products and Variable Contracts Representative (Series 6). From August 2009 through October 2012, Exford was registered with IBN Financial Services, Inc. (IBN Financial). Thereafter, from November 2012 to March 2015, Exford was registered through State Farm VP Management Corp.
According to FINRA, in January, 2014, the agency began investigating whether Exford had engaged in a private securities transaction. As part of its investigation, on January 13, 2015, FINRA sent a request to Exford’s attorney for on-the-record testimony. According to FINRA, Exford’s attorney stated on a call with FINRA staff on January 30, 2015, that he will not appear for on-the-record testimony at any time. Consequently, Exford was barred by FINRA.
The allegations against Exford are consistent with “selling away” securities violation. 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 the brokerage firm claim ignorance of their advisor’s activities, under the FINRA rules, a brokerage firm owes a duty 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 often occurs in brokerage firm that 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.
Investors who have suffered losses 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.