According to BrokerCheck records kept by The Financial Industry Regulatory Authority (FINRA) advisor Ralph Adamo (Adamo), formerly associated with FSC Securities Corporation (FSC Securities) in Newport Beach, California was terminated by his firm concerning allegations that he engaged in an unapproved financial transaction with a client. Adamo has been subject to two customer complaints including one for over $4 million in claimed damages. That complaint alleges a solicitation of a personal loan and is still pending. In addition, Adamo has been subject to two prior regulatory actions. One action in 2005 alleged that Adamo paid customers privately to resolve complaints without telling his firm.
At this time it is unclear the extent of Adamo’s outside business activities or private securities transactions. Adamo disclosed a number of outside business activities including that he operates his securities business through a d/b/a Integrity Wealth Management.
The allegations concern private securities transactions – a practice known in the industry as “selling away” – a serious violation of the securities laws.
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. When advisors convert or misappropriate funds they often created businesses or other vehicles to serve as a cover for the theft of funds. Firm attempt to disclaim liability for the theft of funds by their brokers by claiming ignorance of their advisor’s activities. However, federal securities laws and the FINRA rules require firms to 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.
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.
Adamo entered the securities industry in 1987. From 1995 until December 2017, Adamo was associated with FSC Securities.
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.