Articles Posted in Selling Away

FINRA has barred former WestPark Capital broker Gregory Walter McCloskey from the securities industry. According to an Office of Hearing Officers (“OHO”) order, McCloskey participated in two undisclosed private securities transactions involving a customer who was an elderly, retired widow and then sought to conceal these transactions from his member firms and FINRA.

If you have lost money with Gregory Walter McCloskey, or WestPark Capital, contact FINRA arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account. 

FINRA Disciplinary Proceeding No. 2018059242801

FINRA has suspended Stewart Schram from the securities industry for four-months for engaging in outside business activity and private securities transactions without firm approval. In addition to his suspension, Mr. Schram was also fined $7,500.

FINRA began its investigation after receiving a regulatory tip. Mr. Schram is no longer associated with any FINRA member but remains subject to FINRA’s jurisdiction.

If you have lost money with Stewart Schram, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

We are continuing our discussion of FINRA’s 2021 Report on Risk Monitoring and Examination Activities. In Part Two, we will focus on FINRA’s comments and findings related to Variable Annuities, Outside Business Activities, and Private Securities Transactions and Private Placements. These are all areas of interest that directly affect retail investors, and in which FINRA found deficiencies following its examination of member-firms. 

If you are interested in FINRA’s comments regarding Regulation Best Interest (Reg BI), Communications with the Public, and Best Execution, you can read Part One of our discussion here.

Variable Annuities

FINRA has barred stockbroker Gary Wayne Hammond from the securities industry. On January 19, 2021, Mr. Hammond and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) over allegations that between February 2016 and October 2016, Mr. Hammond participated in at least 14 private securities transactions totaling $1.6 million without providing written notice to his firm. At the time, Mr. Hammond was registered with MSI Financial Services.

If you have lost money with Gary Wayne Hammond or MSI Financial Services f/k/a MetLife Securities, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

FINRA AWC

FINRA has suspended financial advisor Rawad Roy Alame (CRD #5376696) from the securities industry for six months, fined $5,000, and ordered him to pay $2,700 to a former client.  Rawad Alame was a stockbroker at Merrill Lynch, Pierce, Fenner & Smith Incorporated, working out of branch offices in Raleigh, North Carolina, and Provo, Utah, from January 2016 until June 2019.  Mr. Alame’s employment was terminated by Merrill Lynch, which alleged that he completed an account-related document, signed by clients, to service a client’s account that was not held at Merrill Lynch and failed to be forthcoming with Merrill Lynch’s review of the matter.

Since leaving Merrill Lynch, Mr. Alame has been affiliated with Insight Advisors, LLC in Newtown, Pennsylvania, and Gate Key Financial, L.L.C., in Raleigh, North Carolina.

If you have lost money with Rawad Alame, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

FINRA has suspended financial advisor Michael Anthony Tavel (CRD #4862463) from the securities industry for 18 months and fined him $20,000.  Michael Tavel was a stockbroker at LPL Financial LLC, in Indianapolis, Indiana, from September 2004 until April 2019. He has also been affiliated with Charter Advisory Corporation and Tavel Insurance & Financial Services, LLC.

If you have lost money with Michael Tavel, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Michael Tavel and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on December 17, 2020, over allegations related to Mr. Tavel recommending private securities transactions to three investors.  One of the transactions involved a senior customer.   Mr. Tavel did not have a reasonable basis to believe that the recommendation that the senior invest in the private security was suitable.  Mr. Tavel also provided misleading materials to the customers and, after the customer orally complained, improperly attempted to settle the complaint away from the firm.

FINRA has barred financial advisor Michael Edward Magill (CRD #2024663) from the securities industry.  Michael Magill was a stockbroker at Foreside Fund Services, LLC, in Portland, Maine, from August 2017 until January 2019.

If you have lost money with Michael Magill, contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Mr. Magill has been a financial advisor and registered representative at the following firms:

Registration Dates    Firm Name Branch Location
August 2017 – January 2019 Foreside Fund Services, LLC Portland, Maine
August 2016 – July 2017 Crossroads Capital Distributors, LLC Newport Beach, California
December 2004 – December 2015 Janus Distributors LLC Denver, Colorado
January 2000 – January 2005 Davis Distributors, LLC Tucson, Arizona
January 1996 – January 1997 TCC Securities Corporation San Francisco, California
July 1995 – January 1996 Phoenix Securities, Inc. San Rafael, California
June 1994 – November 1994 Continental Capital Group, Inc.  
May 1991 – November 1992 John Hancock Distributors, Inc. Boston, Massachusetts
May 1991 – November 1992 John Hancock Mutual Life Insurance Company Boston, Massachusetts
January 1990 – July 1990 *Hibbard Brown & Co., Inc. New York, New York

*FINRA expelled Hibbard Brown & Co., Inc. on February 22, 1996

Michael Magill and FINRA entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) on December 7, 2020, over allegations related to Magill recommending private securities transactions to three investors. The securities sold to the investors were not legitimate investments and the three investors, who were not customers of Foreside Fund Services, LLC, lost their entire investment, totaling $700,000.  Specifically, FINRA alleged:

  • On December 3, 2018, while registered with Foreside Fund Services, LLC, Mr. Magill began working on behalf of a private issuer to find potential investors for a principal-protected note offered by the issuer.
  • Magill contacted prospective investors, provided them with marketing materials, explained the investment and terms of the note, and directed them to the issuer’s website to complete the paperwork necessary to make the investment.
  • In December 2018, Mr. Magill recommended the principal-protected note to three investors, who invested a total of $7000,000.
  • The first investor was 78 years old at the time of the investment and invested $100,000.
  • A second investor invested $250,000, and a third investor invested $100,000.
  • The investors were not customers of Foreside Fund Services, LLC.
  • To entice the prospective investors, Mr. Magill offered higher interest rates for immediate investments and told the investors that the investment was only available for a short time.
  • Magill earned $14,000 in commissions, a bonus for securing investments by the end of 2018, and the salary the private issuer paid him.
  • Before recommending the principal-protected note, Mr. Magill failed to conduct reasonable diligence to understand the features and risks of investing in the note.
  • In February 2019, federal authorities shut down the private issuer’s offices.
  • An executive of the private issuers and Mr. Magill’s supervisor at the private issuer both pled guilty to conspiracy to commit wire fraud and sentenced to prison. Another executive died in custody while awaiting trial.
  • Foreside Fund Services, LLC required its financial advisors to receive the firm’s written approval prior to participating in the transaction.
  • Magill did not provide written notice to Foreside Fund Services, LLC and received no written approval to participate in the three private securities transactions.

When a financial advisor solicits a customer to participate in a securities transaction that is not offered or approved by the advisor’s employing brokerage firm, it is often referred to as selling away.

This blog has previously written about other recent selling away allegations:  Future Income Payments, LLC.

Brokerage firms like Foreside Fund Services, LLC must properly supervise financial advisors and customer accounts.  Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, to ensure compliance with securities laws and industry regulations.   When a brokerage firm fails to sufficiently supervise its financial advisors or the investment account activity, it may be liable for investment losses sustained by customers.

If you have lost money with Michael Edward Magill or Foreside Fund Services, LLC, contact New York securities arbitration lawyer August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (855) 430-4010 for a free and confidential review of your account.

Iorio Altamirano LLP is a boutique law firm located in the heart of New York City. Iorio Altamirano LLP represents investors nationwide who have suffered investment losses due to securities fraud.

FINRA has barred financial advisor Matthew Jennings (CRD# 6762685) from the securities industry for refusing to cooperate with a FINRA investigation.    Mr. Jennings was fired by Edward Jones in August 2019 due to concerns that he introduced clients to investments not offered through the firm.  This type of conduct is often referred to as “selling away.”

What is “selling away?”

“Selling away” is when a financial advisor solicits a customer to participate in a private securities transaction that is not offered or approved by the brokerage firm where the financial advisor is employed or registered.

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