Securities Lawyers Blog
The Financial Industry Regulatory Authority (FINRA) sanctioned broker Matthew Westfall (Westfall) concerning allegations that from June 2011, through December 2012, while associated with the National Planning Corporation (National Planning), Westfall engaged in business activities outside the scope of his employment with the Firm. FINRA found that Westfall solicited 18 customers to purchase lraqi Dinar currency as an investment without firm approval to engage in this outside business activity. In addition, FINRA found that National Planning had internal guidelines that limited the amount customers were permitted to invest in illiquid investments, such as non-traded Real Estate Investment Trusts (REITs). According to FINRA, Westfall submitted falsified documents that exaggerated the net worth for customers permitting investments in amounts that National Planning would have otherwise prohibited.
Westfall entered the securities industry in 1983. From 2003 until August 2010, Westfall was associated with Securities America, Inc. From September 2010 to December 2012, Westfall was associated with National Planning. Thereafter, in May 2013, Westfall became associated with Primex
FINRA found that Westfall engaged in an undisclosed outside business activity of selling Dinars to 18 National Planning customers. FINRA alleged that the 18 firm customers purchased $87,954 in Dinars through Wcstfall through a personal account that he had with an online company that sold Dinars. For these sales, Westfall received approximately $8,344 in compensation.
In addition, FINRA found that Westfall provided false answers on two National Planning questionnaires in August 2012 and September 2012, when he answered that he had disclosed all of business activities. The questionnaires were false because according to FINRA Westfall knew that he had participated in an outside business activity of selling Dinars to firm customers.
FINRA rules require member firms to preserve books, accounts, records, memoranda, and correspondence in conformity with all applicable laws, rules, and regulations. FINRA found that During 2011 and 2012, the National Planning had guidelines that limited a customer’s total investments in Direct Participation Programs, such as non-traded REITs, to no more than 20% of the customer’s liquid investment net worth. In addition, the guidelines also stated that no more than 10% of the customer’s liquid investment net worth may be invested in any particular Direct Participation Program.
FINRA found that Westfall placed inaccurate financial information concerning five firm customers’ net worth on Public Direct Participation Programs Suitability Checklists in order to have those customers purchase REITs. According to FINRA the customers’ net worth as listed on their new account forms was below the amount for their REIT investments to be in compliance with the Firm’s guidelines. In one example, FINRA found that Westfall increased a customer’s net worth by $225,001 so the customer could invest an additional $15,000 in a REIT for a total investment of $65,000. As a consequence FINRA found that Westfall caused the National Plannings’ books and records to be inaccurate.
The attorneys at Gana Weinstein LLP are experienced in representing investors concerning claims involving outside business activities and non-traded REITs. Our consultations are free of charge and the firm is only compensated if you recover.