Articles Tagged with stock fraud lawyer

shutterstock_157506896-300x300The attorneys at Gana Weinstein LLP are investigating BrokerCheck records reports that financial advisor Brian Lockett (Lockett), formerly employed by Independent Financial Group, LLC (Independent Financial) has been subject to at least nine customer complaints and one regulatory action during the course of his career.  According to records kept by The Financial Industry Regulatory Authority (FINRA), Lockett’s customer complaint alleges that Lockett recommended unsuitable investments among other allegations of misconduct relating to the handling of their accounts.

In November 2019 FINRA brought a regulatory action against Lockett that he settled consenting to findings that he participated in a private securities transaction without providing prior written notice to his member firm. FINRA found that one of Lockett’s customers invested a total of $50,000 in a private placement offering and that Lockett participated in the transaction by introducing the transaction to the customer, summarizing the reasons he liked the investment, meeting with the customer to review and sign the paperwork and causing the paperwork to be submitted. FINRA found that Lockett did not receive compensation for his participation in the transaction and that Lockett attempted to conceal his role in the transaction by suggesting to the customer that the customer communicate about the transaction with Lockett in the future via Lockett’s personal email address. According to FINRA, after the customer complained to the firm, it entered into a settlement to resolve the complaint.

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shutterstock_189276023The Financial Industry Regulatory Authority (FINRA) barred (FINRA AWC No. 20150454876-01) former PFS Investments, Inc. (PFS Investments) broker Malcolm Babin (Babin) after the broker failed to respond to a letter from the regulator requesting information. While BrokerCheck records kept by FINRA do not disclose the nature of the regulatory inquiry, in May 2015, Babin was permitted to resign from PFS Investments stating that the broker was terminated for 1 being involved in a misappropriation; 2) unlicensed security solicitation, and 3) an undisclosed outside business activity and potentially a private securities transaction – also referred to in the industry as “selling away.”

Babin entered the securities industry in 2007 with PFS Investments as a Series 6 broker. A Series 6 license only allows the broker to solicit variable contracts and open-end mutual funds and does not allow the broker to solicit general securities. FINRA alleged that on July 7, 2015 FINRA was investigating allegations that Babin converted customer funds and engaged in undisclosed outside business activities. FINRA requested that Babin provide documents and information by July 14, 2015. The regulatory stated that they received an email from Babin acknowledging receipt of FINRA’s requests for documents but informed staff that he would not cooperate. Consequently, the regulator barred Babin from the securities industry.

The conduct alleged against Babin constitutes a potential “selling away” securities violations. 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.

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