GIFl as a type of "holding company" for which, in his capacity as co-manager, Goldberg made several private investments. Goldberg's management over the investment decisions, on behalf of and through GIFI, led to his participation in seven separate private securities transactions involving securities such as interests in an entity that owned shares of a publicly traded company, convertible promissory notes, and common stock.. .
DURING THE COURSE OF AN INVESTIGATION MR. GOLDBERG ADMITTED TO CONCEALING HIS INVOLVEMENT WITH OUTSIDE BUSINESSES FROM EDWARD JONES. ONE OF THE BUSINESSES INVOLVED OWNERSHIP INTEREST IN ANOTHER BROKER/DEALER AND ONE INVOLVED PARTICIPATION IN A TRANSACTION TO TAKE A PUBLIC COMPANY PRIVATE. OTHER OUTSIDE INVESTMENT ACTIVITIES WERE NOT DISCLOSED TO THE FIRM AND WERE NOT INITIALLY ADMITTED TO DURING THE INVESTIGATION
Collectively, Goldberg made investments through, or on behalf of OIFI, and thus participated in private securities transactions, outside the scope of his employment with Edward Jones, involving seven separate purchases of securities which occurred sporadically over a lengthy period of time (September 2003 through February 2011), and involving the investment of almost $2 million.
Also READ:NASD Conduct Rule 3040: Private Securities Transactions of an Associated Person(a) ApplicabilityNo person associated with a member shall participate in any manner in a private securities transaction except in accordance with the requirements of this Rule.(b) Written NoticePrior to participating in any private securities transaction, an associated person shall provide written notice to the member with which he is associated describing in detail the proposed transaction and the person's proposed role therein and stating whether he has received or may receive selling compensation in connection with the transaction; provided however that, in the case of a series of related transactions in which no selling compensation has been or will be received, an associated person may provide a single written notice.(c) Transactions for Compensation(1) In the case of a transaction in which an associated person has received or may receive selling compensation, a member which has received notice pursuant to paragraph (b) shall advise the associated person in writing stating whether the member:(A) approves the person's participation in the proposed transaction; or(B) disapproves the person's participation in the proposed transaction.(2) If the member approves a person's participation in a transaction pursuant to paragraph (c)(1), the transaction shall be recorded on the books and records of the member and the member shall supervise the person's participation in the transaction as if the transaction were executed on behalf of the member.(3) If the member disapproves a person's participation pursuant to paragraph (c)(1), the person shall not participate in the transaction in any manner, directly or indirectly.(d) Transactions Not for CompensationIn the case of a transaction or a series of related transactions in which an associated person has not and will not receive any selling compensation, a member which has received notice pursuant to paragraph (b) shall provide the associated person prompt written acknowledgment of said notice and may, at its discretion, require the person to adhere to specified conditions in connection with his participation in the transaction.(e) DefinitionsFor purposes of this Rule, the following terms shall have the stated meanings:(1) "Private securities transaction" shall mean any securities transaction outside the regular course or scope of an associated person's employment with a member, including, though not limited to, new offerings of securities which are not registered with the Commission, provided however that transactions subject to the notification requirements of Rule 3050, transactions among immediate family members (as defined in Rule 2790), for which no associated person receives any selling compensation, and personal transactions in investment company and variable annuity securities, shall be excluded.(2) "Selling compensation" shall mean any compensation paid directly or indirectly from whatever source in connection with or as a result of the purchase or sale of a security, including, though not limited to, commissions; finder's fees; securities or rights to acquire securities; rights of participation in profits, tax benefits, or dissolution proceeds, as a general partner or otherwise; or expense reimbursements.