FINRA Suspends Broker for Undisclosed Private Securities Transaction

FINRA suspended a broker for participating in an undisclosed private securities transaction with a firm customer.

According to the AWC, the broker solicited one of his customers to purchase a promissory note issued by a "purported real estate development company." FINRA found that the broker facilitated the customer’s $150,000 investment by (i) "introducing the customer to the opportunity," (ii) "providing the customer’s information to the company," and (iii) "assisting the customer [in] obtaining a loan to partially fund the investment." FINRA stated that the broker failed to provide prior written notice to his firm before participating in the transaction and falsely attested on annual compliance questionnaires that he had not engaged in any undisclosed private securities transactions.

FINRA determined that the broker violated FINRA Rules 3280 ("Private Securities Transactions of an Associated Person") and 2010 ("Standards of Commercial Honor and Principles of Trade").

The broker consented to a four-month suspension from associating with any FINRA member in all capacities and a $5,000 fine.