Securities Lawyers Blog
Previously financial advisor Ronald Bailey (Bailey), previously employed by brokerage firm Mutual of America Securities LLC has been subject to at least 5 disclosable events. These events include 4 customer complaints, one regulatory event. According to a BrokerCheck reports most of the recent customer complaints concern either corporate debt securities or alternative investments such as direct participation products (DPPs) like business development companies (BDCs), non-traded real estate investment trusts (REITs), oil & gas programs, annuities, and private placements. The attorneys at Gana Weinstein LLP have represented hundreds of investors who suffered losses caused by these types of high risk, low reward products.
FINRA BrokerCheck shows a final customer complaint on September 09, 2022.
Without admitting or denying the findings, Bailey consented to the sanctions and to the entry of findings that he participated in an undisclosed private securities transaction. The findings stated that Bailey entered into an investment marketing agreement with a limited liability company (LLC) to sell and market LLC membership interests in a seafood processing company and affiliate of the LLC, for compensation of up to a 0.5 percent membership interest in the LLC. In connection with these activities, Bailey distributed the LLC’s financial projections and other marketing materials to the potential investors and arranged investor meetings for the potential investors with the seafood processing company’s and the LLC’s management. Bailey solicited a customer at his member firm to invest $588,000 in an LLC membership interest in the seafood processing company and was given a 0.5 percent membership interest in the LLC as compensation for the successful solicitation. Bailey did not notify or receive prior written approval from his firm to participate in this private securities transaction. In addition, Bailey attested during an annual compliance interview that he had not solicited any persons to make any investments other than in products offered by or through the firm. The findings also stated that Bailey engaged in undisclosed and unapproved outside business activities (OBAs). Bailey introduced the LLC’s management to contacts who could provide it with transportation services. In an effort to market the company, Bailey also contacted an Alaskan official regarding the company’s expansion into China. Bailey did not disclose his OBAs with the LLC to the firm until one year later. Bailey also engaged in undisclosed and unapproved OBAs with a human resources consulting and payroll administration company. Bailey and two partners registered the company’s name and marketed the company to the public. Bailey submitted an OBA approval request too the firm to own and operate the company, but the firm denied the request. Despite the firm’s denial, Bailey continued his business activities with the company. The findings also included that Bailey did not submit any communications regarding investments in the seafood processing company to the firm for internal review prior to their distribution. In the course of soliciting potential investors, Bailey’s communications did not provide the key assumptions underlying the seafood processing facility’s yearly profit projections, and did not identify the key limitations, impediments and restrictions that could impede the achievement of the profit projections. The communications also did not disclose the risks of the investment, including the general risks associated with private placements that they are speculative in nature, illiquid, and the possibility of the entire loss of the investment. As a result, the communications did not provide the investor with the required sound basis to evaluate all the relevant facts with respect to the potential investment. Baily also emailed a prospective investor a communication from the LLC’s management and a financial statement that contained promissory, unwarranted, and misleading statements.