Articles Tagged with Precision Financial Services

shutterstock_179203760-300x300Our firm is investigating claims made by The Financial Industry Regulatory Authority (FINRA) against broker Michael Babyak (Babyak), formerly associated with brokerage firms LPL Financial LLC (LPL) and Leigh Baldwin & Co., LLC (Leigh Baldwin).  According to brokercheck, Babyak consented to the sanction that he participated in private securities transactions involving customers of a member firm without first providing the firm written or oral notice of his activities. FINRA findings stated that Babyak had the customers invest a total of $4,250,000 into a limited liability company that he had created.

Babyak is then alleged to have assisted in wiring funds from the firm’s accounts to the borrower and the limited liability company’s bank account and signed the loan agreement and related security agreement on behalf of the company he created. FINRA alleged that Babyak then caused the company to loan the $4.25 million to a third party for the benefit of his customers.  FINRA also discovered that Babyak arranged for the company to use funds repaid from the $4.25 million loan to extend loans on behalf of the customers to two additional borrowers.

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”.  Often times brokers who engage in this practice use outside businesses in order to market their securities.

shutterstock_63635611The 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.