A former broker was recently sanctioned by the Financial Industry Regulatory Authority (FINRA) for allegedly engaging in outside cryptocurrency business activities. According to FINRA, the ex-Wells Fargo broker attempted to start a cryptocurrency company without first disclosing his intent and obtaining approval from Wells Fargo. FINRA further claimed that the broker provided false information to Wells Fargo to try to conceal his outside activity.
Specifically, the broker was accused of violating FINRA Rules 3270 (which governs outside business activities), 3280 (which governs private securities transactions) and 2010 (which governs standards of commercial honor and principles of trade).
FINRA alleged that the broker sought to raise capital from six investors and participated in six private securities transactions without first providing notice to Wells Fargo. To solicit investments, he allegedly created marketing materials and sent emails to potential investors.
The former broker did not admit to or deny FINRA’s findings, but he did sign a letter of acceptance, waiver and consent. He thereby agreed to pay a $15,000 fine, as well as accept an 18-month suspension from associating with any FINRA members. The broker’s alleged violations occurred between April 2015 and January 2019.
For more on securities law compliance and the types of disciplinary actions handed down by FINRA in recent years, please see Ford O’Brien’s April post, “Recent Trends in FINRA Disciplinary Actions.”
If you or your brokerage is under investigation for FINRA or SEC violations, contact an attorney with extensive experience in civil and criminal cases involving allegations of securities fraud. At Ford O’Brien, we advise and represent clients in New York and nationwide.
Source: Think Advisor, “FINRA Suspends Ex-Wells Fargo Rep Over Crypto Concealment,” June 25, 2020