FINRA Suspends Broker for Undisclosed Outside Business Activity

FINRA suspended a broker for failing to disclose an outside business activity involving a real estate investment partnership with a firm customer.

According to the AWC, between March 2020 and May 2023, the broker contributed $340,000 while the customer provided $110,000 to purchase and renovate a property for resale. The broker coordinated the renovations himself, and through contractors, and expected to share in any profits from the sale.

FINRA determined that the venture fell outside the scope of the broker's employment and required prior written notice to the firm, which was not provided. The broker also falsely attested in multiple annual compliance questionnaires that he had disclosed all outside business activities.

FINRA concluded that the broker violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade") and 3270 ("Outside Business Activities of Registered Persons"). 

To settle the charges, the broker agreed to (i) a three-month suspension from associating with any FINRA member in all capacities and (ii) a $5,000 fine.