An irreverent Wall Street Blog
by Bill Singer
by Bill Singer
Stockbroker Suspended For Undisclosed Real Estate Biz And Customer Loans
November 13, 2014
For the purpose of proposing a settlement of rule
violations alleged by the Financial Industry Regulatory Authority ("FINRA"),
without admitting or denying the findings, prior to a regulatory hearing, and
without an adjudication of any issue, [NOTE: Respondent's name REDACTED at the sole discretion of BrokeAndBroker.com Blog]
submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA
accepted. In the Matter of [REDACTED],
Respondent (AWC #20140411667, November 7,
2014).
Respondent was first registered in 2007, and by May 2011 he had become
associated with FINRA member firm Ameriprise Financial Services, Inc., where he
remained until his April 29, 2014, termination. The AWC asserts that he had no
prior relevant
disciplinary history.
Real
Estate OBA
The AWC alleges
that while employed by Ameriprise, on May 31, 2013, Respondent and his wife established M&M Real Estate Investments, LLC
for the purpose of buying and selling real estate properties. Without the
requisite prior written notice by Respondent to
Ameriprise about this outside business activity ("OBA"), M&M
purchased two properties, sold one, and at the time of the AWC was purportedly
in the process of selling the second
property.
Loans From An Old
Friend
The AWC further alleges that for at least 38 years, Respondent was a close family friend of an individual described
only as "DS," who became Respondent's client in
June 2008 until ending that relationship in May 2014. The AWC alleges that on
June 14, 2013, in contravention of firm and
industry policies proscribing the circumstances by which a registered
person may borrow money from a customer, Respondent borrowed
$150,000 from DS for the purpose of funding M&M.
Thereafter, in September 2013, M&M used those funds to purchase and
renovate two investment
properties.
The AWC further
asserts that on March 28, 2014, Respondent borrowed an additional $65,000
from DS. It is alleged that Respondent failed
to notify and receive approval from Ameriprise for either loan. Between June 4,
2014 and June 25, 2014, Respondent repaid $72,000 of the
$215,000 borrowed from DS. No explanation is provided as to the status of the
balance of
$143,000.
Compliance
Questionnaire
Finally, the AWC alleges Respondent failed to
disclose his OBA on Ameriprise's April 2, 2014, annual compliance questionnaires, and,
further, falsely attested that he would comply with the firm's borrowing policies.
Suspension And Termination
Online FINRA BrokerCheck records
as of November 13, 2014, disclosed that Ameriprise "Discharged" Respondent on April 29, 2014, based upon allegations
that:
REGISTERED REPRESENTATIVE WAS SUSPENDED ON APRIL 7, 2014 AND TERMINATED ON APRIL 29, 2014 FOR FAILURE TO DISCLOSE AND OUTSIDE BUSINESS ACTIVITY INVOLVING THE PURCHASE OF REAL ESTATE PROPERTIES, AND RECEIVING FUNDS FROM A CLIENT TO USE TOWARDS THE PURCHASE OF REAL ESTATE PROPERTIES
FINRA Weighs
In
FINRA alleged that Respondent's conduct constituted violations of:
- FINRA Rules 3270 and 2010 by engaging in OBA without providing prior written notice to Ameriprise;
- FINRA Rules 3240 and 2010 by borrowing $215,000 from DS without receiving the required written approval from Ameriprise; and
- FINRA Rule 2010 by falsely attesting on his 2014 annual compliance questionnaire that he had disclosed all OBA.
In accordance with the terms of the AWC, FINRA
imposed upon Respondent a five-month suspension in all capacities. Based
upon Respondent's submission of a sworn
financial statement and his demonstration of an inability to pay a proposed
fine, FINRA did not impose a fine in light of his financial
status.