The securities fraud lawyers of Gana Weinstein LLP are investigating a regulatory complaint (Disciplinary No. 2013038770901) filed with The Financial Industry Regulatory Authority’s (FINRA) against broker Ricky Moore (Moore). FINRA alleged that between March 2012 and April 2013, while he was registered with Commonwealth Financial Network (Commonwealth Financial) Moore failed to disclose to the firm his outside business activities, also referred to as “selling away”, involving the facilitation of a church bond offering for a church located in Brazoria, Texas. In addition, to the FINRA complaint Moore has been subject to three customer complaints.
FINRA alleged in the complaint that Moore failed to disclose to his member firm his outside business activities involving the facilitation of a church bond offering for a church. The complaint alleges that Moore acted as the president and director of the church and facilitated the church bond offering for the church. In addition, FINRA found that Moore made a false and misleading statement on his firm’s annual compliance questionnaire when asked whether he had participated in raising capital, equity, or debt for a public or private investment. Moore answered “No” and also falsely stated that he had no undisclosed outside business activities. Thereafter, Commonwealth Financial conducted an investigation and Moore was permitted to resign after the firm terminated Moore’s registration.
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.